Signed, sealed and delivered: UK courier and express delivery services set to record fastest annual growth for five years

A meteoric rise in online shopping is expected to send courier and delivery sales soaring this year, as latest research from Mintel estimates the market will achieve annual growth of 23% in 2020, the biggest annual increase since 2015, when the growth rate was 17%.

Demand for courier services was already booming prior to COVID-19, with the value of the market increasing by 44% between 2014 and 2019 from £7.6 billion to £11 billion. By the end of this year the courier and delivery market is expected to reach an estimated £13.5 billion. 

This growth is set to continue, as according to Mintel, the sector’s market value is forecast to increase by 92% between 2019 and 2024 to reach £21 billion.

The boom in courier and delivery service comes as over four in ten (42%) Brits said they had done more online shopping since the start of the outbreak.* 

Francesco Salau, Mintel Research Analyst, said:

“The likelihood of ongoing social distancing measures should benefit the courier and delivery industry, with an increase in homeworking meaning that the inconvenience of having to ensure that you are at home to receive large deliveries becomes less of a pain for consumers. In the long-term, the steady rise in e-commerce sales, increasing sophistication of delivery services, and the growth of delivery subscription services should outweigh the damage done to the sector by a slowing economy.

“Health and safety has become a key concern for both consumers and courier workers, with major couriers quick to demonstrate awareness of this by offering contactless delivery and equipping the sector’s workers with protective equipment. This will speed up trends that were emerging prior to the crisis, such as drone delivery and technologies that allow couriers access to car boots and smart ‘drop boxes’ outside consumers’ homes.”

Older consumers will be driving force in market growth in the short/medium term

Many older consumers have been forced to engage with online retailing, as they form part of the population especially at risk from COVID-19, and as such demonstrate the highest concern about exposure.

According to Mintel research, over half (56%) of over-65s are worried/extremely worried about being exposed to the virus – compared to just 40% of 16-24-year olds. Meanwhile, over-65s are increasingly going online for their shopping requirements. Prior to the lockdown this age group was the least likely to shop online; in May 2019, just 16% of those aged 65+ shopped online at least once a week, compared to over half (54%) of consumers aged 25-34 – who were in fact the most frequent online shoppers. Following lockdown, the over-65s are as likely as the average consumer to have shopped more online since the start of COVID-19 (43% vs 42% of all adults).

Generation Z and Millennial consumers are the driving forces of online shopping, with just under two thirds (63%) of under-45s owning a delivery pass subscription (such as Amazon Prime and ASOS’ Premier Delivery service) compared to over one third (36%) of over-45s. While key consumers, these younger Brits are likely to be more vulnerable to the risk of unemployment – which will have a huge impact on their spending. Around four in ten (38%)16-34 year olds are cutting back on non-essential expenses, compared to around three in ten (31%) over-65s.

“A generational divide will arise as a result of COVID-19.  Many older consumers have been forced to engage with online retailing, as they’re part of the population especially at risk from the pandemic.  While Generation Z and Millennial consumers are likely to continue to be the driving forces of the market as the leading online shoppers, they will also be more likely to be cutting back on non-essential spending than older groups. As a result, online retailers, and indeed courier services, are more likely to rely on new business from older consumers in the short to medium term.”

* Mintel commissioned consumer research among 2,000 internet users aged 16+ over the period of 25th June – 1st July 2020.