UK online spending hits all-time high

15 per cent of all retail spending now online

Written by Ian Williams

Online shopping in the UK soared to an all-time high in the run up to Christmas.

Consumers spent £15.2bn in October, November and December, according to the latest e-Retail Sales Index compiled by Capgemini and the Interactive Media in Retail Group.

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The figures brought full 2007 UK online sales to £46.6bn, an impressive 54 per cent increase on the £30.2bn in 2006.

"Online growth has proved robust and sustainable over the past year, increasing its share of UK retail from 10p in the pound to 15p," said Anthoula Madden, vice president of consumer products in the UK at Capgemini.

"While we are yet to see high street sales decline, there can be no doubt that online is growing its share at the expense of bricks and mortar retailers and we believe that this trend will continue."

December's e-commerce sales were nearly 50 per cent up on last year, but demand for online shopping tailed off significantly towards the end of 2007. The researchers attribute this to the credit crunch seen across the UK economy.

Peak online shopping occurred in the first week of December which saw a nine per cent increase in all online sales.

This is later than in previous years, indicating that consumers are making the most of pre-Christmas discounting and delaying purchases until the onset of the sales.

"The latest stats from the IMRG Capgemini e-Retail Sales Index highlight the importance of a multi-channel strategy if high street retailers are to compete effectively with their online counterparts," said Madden.

Furthermore, the final week of the year saw a reduction in online sales of just four per cent, suggesting a tendency to go online to spend Christmas money and vouchers and to exploit post-Christmas sales online rather than on the high street.

"Why would you fight the shopping crowd to buy a TV on the high street when you can arrange for it to be delivered to your home at a time that suits you and often at a more competitive price?" asked James Roper, chief executive at IMRG.

"Consumers are making the most of the 24/7 convenience and competitive pricing that online shopping has to offer.

"Consumer behaviour has changed dramatically over the past few years and is the driving force behind many of the changes in the e-retail landscape.

"If retailers intend to be part of the future scene they need to develop a robust online presence, but this is getting harder as the sophistication of various channels increases and customer expectations rise."

UK retailers ran online sales promotions on Christmas Day, attracting significant levels of business while the high street shops were shut.

Some four million people shopped online on 25 December, spending an estimated £84m at an average of approximately £21 each.

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