UK shoppers spend £145m a day online

A DOWNTURN in the economy has seen shopping on the internet rocket over the past 12 months, with more than £145 million now spent online every day.

In the first six months of this year, online sales soared to £26.5 billion, as shoppers increasingly turned away from the high street and looked for bargains elsewhere. Since January, internet shopping has increased by 38 per cent compared with the same period in 2007, according to a new report.

The e-retail sales index shows internet shopping has comprised 17p in every £1 of retail spending this year, compared with 15p last year.

The surge in e-commerce showed online sales had been resilient in the face of tough high street trading conditions, according to IMRG (Interactive Media in Retail Group) and Capgemini, which carried out the research.

Online clothing sales had been particularly strong, the report said. Shoppers spent a record amount on clothes in March, a month-on-month increase of 21.8 per cent and 31.2 per cent more than in March 2007.

Lingerie sales were up by 37 per cent on March 2007, while footwear rose by 38 per cent. Sales of electrical goods and alcohol showed a dip of 10 and 11 per cent respectively, although experts said the long-term trend was upwards.

David J Smith, the director of operations for IMRG, said the slowdown in the economy was fuelling the rise. "Certainly, when there has been a downturn in the wider economy, people go to the internet looking for bargains, especially in the clothing sector," he said.

"However, we are seeing that it is the high end and the lower end that are benefiting the most, while the mid-market is not seeing the same sort of increase."

Mr Smith said the trend reflected shoppers' habits of buying expensive items, such as a scarf from Burberry, to wear with cheaper items.

The report predicted many more high street stores could disappear as retailers move online. Mike Petevinos, of Capgemini UK, said: "We predict between 30 per cent and 50 per cent of all retail will be online in five years."

James Roper, the chief executive of IMRG, which represents online retailers, said: "Tight budgets and poor weather keep people at home where they can shop online for bargains. Clothing and footwear sales were the biggest losers in physical stores in June."

The value of online shopping was highlighted by the childcare chain Mothercare yesterday, when its latest figures showed that its overall like-for-like sales had increased by 1 per cent, while sales at its Direct in Home online and catalogue business were up 77.7 per cent over last year.

Ian Peacock, the chairman, stressed the importance of the internet in its business strategy. "The multi-channel UK business has shown resilience in a slow economic environment, strengthened by the successful direct operations," he said.

The IMRG Capgemini index tracks online sales using data from 60 e-retailers. Its data includes retail spending on the likes of groceries, clothes, electricals, tickets, travel and digital downloads.

The index excludes online spending on sectors such as telecoms, utilities, gambling, cars, property and financial services.

The report bears out recent research that people are looking to the internet as their first port of call when it comes to making major purchases.

UK internet traffic to retail websites has increased by 6.5 per cent compared with last year. One of the main growth drivers is the number of people searching for bargains online, with searches for "sales" having reached their highest since Christmas. Another factor is the rising price of petrol, which discourages people from heading out on potentially fruitless journeys to out-of-town shopping centres.

John Lewis's figures have reflected this trend; the group has reported dips in sales in its out-of-town shops but says its website has experienced 20 per cent year-on-year growth.

Last night, Fiona Moriarty, director of the Scottish Retail Consortium, said that successful internet retailers tended to be the big high street names and that people still favoured hitting the shops.

"The IMRG figures tend to be on the high side, as they include a range of things such as holidays and car parking, which are not regarded as traditional retail spending," she said.

"While internet retailing is growing, around 90 per cent of retail spending is still done in the traditional way, namely in shops. With one or two exceptions, the biggest online retailers are also the biggest traditional retailers, so the internet is just another way for them to reach their customers."

It's great for the hard-to-find stuff

SARAH MacLeod from Glasgow is a confirmed internet shopper. The 26-year-old horticulturist finds buying online useful for work and is also going to the high street far less for her personal items.

She said: "It's great for plants, I do recommend it to customers if they are looking for something very specialised but I also use it to find particular plants I'm looking for that aren't available locally."

She also uses the internet to track down specialised goods and products which are hard to find on the high street.

She said: "I was knitting a jumper and ran out of wool and couldn't find it anywhere.

"I went online and found it on the John Lewis site. They had all the wool there, even the colour I wanted and the lot number so I was able to be completely sure it would match."

A key attraction for Miss MacLeod is the accessibility. She said: "You can do it so quickly whatever the time of day and you don't have to worry about getting a day off work to go to shops in town.

"Plus you don't do that thing where you end up buying lots of things you didn't plan to – you just get what you want and don't overspend. I also find it useful for sending presents to people who live hundreds of miles away.

"A lot of sites offer a gift wrapping service."

Finding obscure books and films is also a major advantage of the internet.

She said: "I was given a book I loved which was part of a series but I couldn't find the rest in the shops. I bought them online. It's great for rare titles.

"I still like to try clothes on in shops but really, for everything else, the internet is great."

Some retailers set to suffer at hands of price-conscious consumers

Bryan Johnston

THE main impetus of internet buying is still coming from younger consumers, the 18 to 35-year-old fashion-conscious people who want to buy facsimiles of clothing worn by their heroes. That kind of market has been a huge success.

The pull of the internet has also been boosted by the ever- growing difficulties of actually getting into the high street. Never mind the so-called "credit crunch" – cities are now much more difficult to get into because of parking charges and congestion.

You have two choices instead. You either go to the outskirts to the shopping outlets, but it is hardly the most exciting experience. The other choice is that you go to the internet.

In the United States, this has now reached the height of sophistication. They have intelligent dustbins, so when you throw out your last can of baked beans, your dustbin will automatically reorder from your local store via the internet. Internet shopping is also often cheaper than shopping on the high street. A lot of people will still prefer to buy items such as clothing and books from shops, but you only have to look at the success of companies such as Amazon to see that things are changing and these sites are becoming ever more popular.

At these times of heightened concerns over the economy, it is important to note that high-end goods – the designer clothing market – are continuing to hold up well. But if you look at the downstream operations, there are definitely signs of a more price-conscious environment. The average consumer is now much more concerned about price.

I think in the months to come, the high-price areas will be losing market share to their lower-priced competitors, and I expect that to include the internet. That is definitely a trend to come. When times are tough, people are more price-conscious, and that includes the actual cost of driving to the store with higher fuel prices.

To try to protect their profits, we are already seeing a push by the big brands to sell their products online. I don't think they can afford not to look more towards this end of the market.

Smaller shops can try to protect their income by extending the products they offer, so they are convenient for people to access.

Niche markets will always survive, but I think people will undoubtedly become more price-conscious and some retailers will suffer.

• Bryan Johnston is director of the stockbroker Bell Lawrie.