UK shoppers rush to buy goods online

Shoppers browsed retail internet sites in record numbers in the first week of December, adding to the expectations that this year will bring a massive e-Christmas.

Figures to be released today from Hitwise, the internet site monitoring group, show that visits to online retailers reached an all-time high in the week to December 4, with retailers clocking up 13.1 per cent of all visits from surfers. Activity dipped slightly to 12.9 per cent in the week to December 11.

Hitwise said site visits were up 24 per cent in the first week of December against last year. The growth in activity dovetails with research released last week by the IMRG, the electronic retail industry body, that anticipates a 64 per cent leap in online spending to Dollars 4bn (Pounds 2.07bn) this year.

"The amazing thing to me is that there has not been real investment in this area for four years after the boom and bust days," said James Roper, chief executive of the IMRG. "All the growth in the past four years has come from consumer demand."

Mr Roper said about 7 per cent of the UK's Pounds 245bn annual retail sales are now made online, but anticipates strong growth in the coming years as more people get broadband technology and internet shopping becomes more secure.

"I think retail is changing and this new channel is taking quite a lot of retail business," he said. "I think the internet could take up to 30 per cent (of sales) in a decade."

The sharp uplift in online browsing contrasts with more subdued activity on the High Street. Footfall, the retail business information group, reported a 1.7 per cent increase in the number of customers entering stores over the past week compared with the same period last year.

David Smyth, director of marketing and strategy, said the internet was having some impact on high street activity. "The overall level of retail spending is increasing at the normal rates and yet we are seeing excess increases in the internet. It has to come from somewhere and that is from the high street or from mail order."

Figures from Hitwise show that the pure online brands such as eBay, Amazon and Play.com are enjoying the most uplift in site visits.

Richard Goulding, founding partner of Play.com, the entertainment and games e-tailer, expects sales to more than double this Christmas against last year. "We have broken all our records this year," he said.

However, not all the traditional UK retailers are missing out on the rise in internet shopping, with Argos, Tesco and Comet all among the top 10 retail sites visited over the past week.

Mr Roper said: "The smart people are not allowing (internet growth) to cannibalise sales. At John Lewis, Argos, Tesco, consumers want to buy online so these retailers are letting them buy online. But the people that haven't facilitated that – or have come to the party late – will be losing sales; Morrison, Asda, Selfridges, Harrods, Allders, BHS."

Alison Lancaster, head of marketing and catalogues at John Lewis Direct, said internet sales were up by more than 100 per cent on a like-for-like basis last week, against a 4.2 per cent fall in underlying sales at John Lewis stores.

"If we weren't trading online, we would lose that business to other companies," she said. "We have always thought of it as a multi-channel strategy where we are not competing across these different channels, rather they are complementary."

Indirah Thambiah, head of e-commerce at Argos, said yesterday that about 5 per cent of group sales were coming from the internet and the company's direct home delivery service.

"It has been a difficult Christmas for retailers in general," she said. "But it has been a growing market for our home delivery service and the internet site. They have both grown strongly, and are being used for research as well as purchasing."

Argos said it expected to overtake Tesco in market share this year, given the level of gifts it sells. Tesco, the biggest online supermarket by far in the UK, said it was seeing strong like-for-like growth in grocery and non-grocery lines ahead of Christmas.

Laura Wade-Gery, chief executive of Tesco.com, said: "Consumers are coming online in greater numbers this year."

However, as Christmas gets nearer, the bricks and mortar retailers are better placed to benefit from the last-minute Christmas rush, given that many e-tailers will be taking their last orders on December 21.