With internet consumer numbers at an all time high and online spending growing at its fastest rate for six years, e-retail shows no sign of succumbing to the economic downturn, according to Verdict Research in its latest report - UK e-Retail 2008.
In 2007, online spending by consumers on retail purchases rose by 35 per cent to £14.7 billion - a rate of growth almost 10 times higher than that experienced by the total UK retail market.
Electrical items and food and grocery made up just under half of all online retail spending in 2007, with electricals taking the lion’s share at 25.1 per cent. However, with a faster online growth rate in 2007 and much lower maturity, the second largest sub-sector food and grocery is on course to leapfrog electricals into the top spot, accounting for 29 per cent of all online sales in 2012, compared to 22 per cent for electricals.
Online shopping’s strong growth is set to continue with online retail set to reach £44.9bn by 2012, which will be 13.8 per cent of total online spending. The findings of the report, launched at an industry briefing held by Barclays Commercial Bank confirm the increasing value for retailers to have a dual presence, both on the high street and online.
There is still a need and place for physical locations, so the key is to ensure that synergies with online retailing are exploited to drive footfall to stores.
According to the report, in 2007 total retail growth was just 3.6 per cent, as consumers’ disposable incomes were starting to be squeezed by higher living costs. However, the online market expanded by more than a third in 2007, driven by a 5.9 per cent increase in internet users and a 24 per cent increase in online shoppers - to 22.6 million people.
Malcolm Pinkerton, senior retail analyst at Verdict Research and author of the report, said: “The internet is widely perceived as a cheaper and easier way of finding lower prices and bargains in most sectors. As the cost of broadband falls, consumers become accustomed to internet shopping and retailers continue to enhance their online propositions; the [shopping] channel will find itself extremely well placed to capitalise on the falling consumer confidence and lower levels of disposable income currently impacting the retail market.”
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