UK shoppers are spending £4.7bn a year on ultra-low-cost international shopping platforms, such as Temu and SHEIN, as retailers face mounting pressure from new global competitors, new research from Barclays and Retail Economics reveals.

Polling over 2,000 UK consumers, its Retail Resilience report found that almost half (49%) have bought from ultra-low-cost marketplaces in the past year, which now account for ~5% of UK non-food online sales.

Ultra-low-cost platforms reshape the retail playing field

The rise of ultra-low-cost international platforms, the report suggests, is intensifying competition, especially in price-sensitive categories, such as fashion, beauty, homewares and GM.

This is dealing traditional UK retailers a double blow, as they face lost custom to new disruptors, while the rise in low-cost competitors causes customers’ pricing expectations to shift.

This not only evolves pricing – and discounting – demands, but it also means domestic retailers face a tougher task in defending margins while maintaining service, quality, trust and compliance standards.

“Ultra-low-cost international platforms are no longer a fringe trend – they’re reshaping how UK consumers think about price, choice and value,” Karen Johnson, Head of Retail and Wholesale at Barclays UK Corporate Bank, commented. “For domestic retailers, that raises the bar, but it also sharpens the focus on where they can compete and win.”

“The risk environment facing retailers has become more complex… creating a testing backdrop for businesses already operating on tight margins,” said Richard Lim, CEO of Retail Economics.

“The retailers best placed to navigate this will be those that build greater agility into how they operate, plan for a wider range of scenarios and respond quickly when conditions change.”

Levelling up for home-grown retail brands

Despite rising consumer spending on ultra-low-cost marketplaces, consumers remain both conscious and wary of the growth of such platforms.

Original research of over 1,000 UK shoppers by the Retail Technology Show (RTS) revealed that over half (54%) believe the Government should follow the example set by the U.S. and bring in changes to the de minimis threshold to stop ultra-cheap ecommerce products flooding the UK market.

This rises to over two thirds (68%) of Gen Z – the very audience that index highest for Temu and SHEIN purchases. 

“There’s no denying that the lure of ultra-low-priced goods will appeal to squeezed consumers as downward pressure on household budgets continues to suppress spending,” said Matt Bradley, Founder & Event Director of RTS.

“While consumers want access to competitively priced goods, they also want to support home-grown brands.”

“Consumers are increasingly calling for the playing field to be levelled up to ensure the ongoing health of the retail sector and the High Street in the long-term,” he added.