Cash-strapped Brits are cutting back on online shopping and switching to budget bricks-and-mortar alternatives, according to new research.
The UK e-Retail report by retail analysts Verdict Research has found shoppers in less well-off social demographics are switching away from the web to shops such as Poundland, Primark and Matalan in order to avoid delivery costs on cheaper items such as clothes and homeware.
"The more robust online shoppers are the ones who use the internet for convenience and are willing to pay a bit more for this advantage when buying products like basic jeans, cutlery or tools, all of which could be found cheaper in stores," the report added.
When it comes to more expensive items, such as electricals, even the most price conscious are still shopping online due to the lower prices the internet offers compared to the high street.
"With its clear price advantage over the traditional bricks and mortar channel, online will become even more attractive to recession-hit shoppers as they venture back to buying big-ticket items. There could be a mini-boom in deferred replacements," the report said.
Electricals and groceries continue to dominate online shopping but clothing and footwear is catching up, the report also adds.
Overall, online shopping continues to outperform the high street—the analyst predicts web sales will grow by 13.3 per cent in 2009, to £20.9bn, while total retail sales will fall by 0.6 per cent.
Verdict Research forecasts online shopping will have a 10 per cent market share of total retail by 2013—up from 6.4 per cent in 2008—and be worth £31.2bn.
Despite the growth, online retailers face challenges ahead in differentiating themselves, the analyst predicts—and will turn to tech as a result.
"Retailers will become more adept at using technology and more consistent at implementing innovations on their websites. For example, the use of tools such as 3D pictures and videos will become more common as online shopping becomes more complex," the report said.
Website usability and personalisation will also become increasing core to winning online shoppers' custom—especially that of more well-off demographics who are likely to be time-pressed and may well be willing to pay more for a quick and easy shopping experience, it added.