Retail News Update

Out of every £1 spent by British shoppers 17p is now going to online retailers, as consumers switch away from traditional shops in favour of picking and paying at their home computer.

A new survey shows £26.5bn was spent on the internet in the first six months of this year – up 38% on 2007. The online total is roughly equivalent to half the UK’s supermarket spending.

The IMRG-Capgemini online sales index suggests online retail is proving far more resilient to the economic downturn than the high street, where cash-strapped consumers are hitting the shops less often, staying local rather than venturing to out-of-town malls, and trading down to cheaper goods.

Figures from several leading retailers underline that trend. While John Lewis’s department stores have been hit by the downturn its online operation has continued to grow rapidly. Online fashion store Asos has produced impressive sales figures, and Ocado, which delivers Waitrose groceries, is seeing sales up 25% on a year ago.

Yesterday Mothercare highlighted a 28% jump in internet sales as one of the big drivers behind its 21% increase in group sales in the 15 weeks to July 11.

The survey suggests online retailers at the bottom and top of the market are performing best. Visits to the Primark and Harrods websites, for instance, are up 12% and 14% respectively on a year ago, while visits to midmarket sites are down 6%.

Online shopping is not immune from the credit crunch – a normal June dip in sales was more pronounced this year and sales of electrical goods are up only 20% this year compared with the 63% growth seen in the same period in 2007.

But the index predicts online growth will remain strong this year as a result of tight household budgets, the cost of petrol and “a general desire to shift to more sustainable shopping patterns”. According to IMRG 56% of people think buying online is more environmentally friendly than high street shopping.

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