Web Shopping Hurting British Storefronts

Even as British Internet shopping grew 16% last month, traffic to retail stores fell. That's bad news for stores lacking a presence on the Web

Bargain hunters helped drive online retail sales last month but a drop in footfall on the high street at the weekend suggests the soaring trade on the internet is hitting stores that do not have an online presence.

Despite the recession, online spending surged by 16 per cent in November compared with the same time last year, according to the IMRG Capgemini-retail sales index. Last month's sales were also up by 26 per cent on October, when the fallout from the banking crisis hit consumer confidence.

In a separate survey, Experian found that retail footfall dropped by an average of 9.1 per cent at the weekend; Saturday's high street traffic fell by 13.12 per cent and Sunday's by 4.99 per cent.

Directors at IMRG said that November's sharp spike in internet sales had been driven by factors including e-tailers matching the aggressive discounting of retailers, such as Marks and Spencer's conducting one-off sales in its stores and online; and customers increasingly checking prices online before purchasing.

James Roper, the chief executive of IMRG, the global industry body for e-retail, said: "While we would naturally expect to see a monthly increase in online sales at this time of the year, it is perhaps surprising that we are continuing to see yearly growth during these otherwise difficult times for retailers. This is a sure sign that high street retailers should look to diversify their activities by embracing the online space, as their customers have."

David Smith, IMRG operations director, said: "I am amazed that Gap, for example, does not yet have a transactional website. It must be hurting them."

In particular, online sales of accessories, such as handbags, increased by 108 per cent last month, albeit from a low base. Online clothing sales were up 18 per cent and footwear sales were 32 per cent higher, despite the effects of the credit crunch.

Online sales of beer, wines and spirits jumped by 53 per cent last month, indicating that consumers were buying their Christmas supplies early.

In contrast, total retail sales, including high street stores and the internet, declined by 0.4 per cent in November – the first time since 1995 that sales had fallen for two consecutive months, the BRC-KPMG retail sales monitor reported last week.

Non-food, non-store sales – which take place over the internet, by mail order or telesales – account for just 4 per cent of total British retail sales.

Mr Smith said: "Undoubtedly, the overall retail cake has shrunk and the internet is now getting a slightly bigger piece of the cake. What we are seeing is that the internet is really coming of age for the consumer."

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