UK e-spend on the up-and-up

Record online sales during 2004

A record number of Brits last year eschewed the pre-Xmas high street shopping stampede in favour of online shopping, and the trend is set continue during the traditional January sales.

An estimated 12m Britons shopped online during 2004, and their Yule spend alone - during the last three months of the year - contributed £2.6bn to the UK's £245bn total annual retail sales. This figure represents a 44.5 per cent increase on the same period in 2003, according to the Times.

This trend towards virtual purchases has hit high street retailers. Woolworths admitted in a Herald report that its "plan to prepare stores for Christmas three weeks earlier than usual had backfired" and that Xmas revenues had been "disappointing".

The chain blames a combination of factors - including DVD piracy and a "general malaise" across the toy industry, but online bargains and discounts have greatly contributed to the appeal of e-shopping at the expense of the traditional store.

As the Herald notes, Dixons, Currys and PC World all offer tempting savings for e-shoppers. For example, Dixons is knocking out a Fuji 605 digital camera for £84.90 online while the in-store price is £169.89.

Accordingly, pundits predict that consumers will continue to favour the web for their January bargains. The head of projects and marketing at IMRG, Andrew McClelland, said: "My gut feeling is that internet January sales shopping will have risen again this year.

"We saw it in the run-up to Christmas and I think we will see it again. At the moment, it is looking a little tight – high street versus the web – but what we are hearing is that electrical products are proving particularly popular with e-shoppers."

However, although UK online sales are on the up-and-up, some analysts warn that the total spend must be put in perspective. Rhys Williams of Seymour Pierce told the Times: "Online retailers are showing significant growth, but it is important to recognise that they are working from a very low base. Four years ago, online consumers accounted for less than 1 per cent of total sales. That figure has now increased to 2.4 per cent.

"On that basis, I would hesitate to argue that online retailers are taking market share from conventional retailers. Also, remember that most of the companies that people are buying from online also have their own stores on the high street. There are very few pure e-tailers out there."

Indeed, UK supermarket chain Tesco - which has its own successful online presence - argues that people are simply chosing to spend their cash in alternative ways, rather than at different retailers: "It is a case of different customers wanting to shop in different ways. Some choose to buy bulky items online while preferring to select fresh produce themselves from their local store. Other customers shop entirely online because it suits their lifestyle."

So, despite the burgeoning online market, virtual shoppers are still some way from sounding the death knell for the high street store. ®

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