Internet shopping at all time high

Despite the credit crunch, internet shopper numbers are at an all time high and online spending is growing by £2.4 billion in 2009. According to Verdict Research in its latest report, UK e-Retail 2009, online spending by consumers on retail purchases will rise by a substantial 13.3% to £20.9 billion: a rate of growth in severe contrast to the historical decline being suffered by the total UK retail market. Although the internet is undoubtedly starting to slow and become a much more competitive environment, online retail is still set to reach £31.2 billion by 2013, accounting for 10.0% of total retail spending.

“The key for individual retailers is to formulate two clear strategies, one for succeeding through the recession and one targeting growth beyond this, as the online channel begins to approach maturity,” says Malcolm Pinkerton, Senior Retail Analyst at Verdict Research and author of the report.

In 2009, total retail growth will contract by 0.6% as consumer spending is ravaged by the effects of the recession. However, the online market will expand by a substantial 13.3% over the course of the year, driven by the continued increases in the number of internet shoppers and higher expenditure per head. This follows on from the trend of 2008 when there was a 1.0% increase in internet users—to 34.4m—and an 18.1% increase in online shoppers—to 26.7m—with each of these individuals spending an average of 5.8% more in comparison to 2007.

The major factor behind this out-performance of wider retail is the online channel's possession of a number of counter-recessionary characteristics. Internet prices are frequently cheaper than they are in physical stores and shoppers are able to more easily search out bargains, including second-hand goods. Moreover, as a method of shopping, it is disproportionately popular with the more affluent, and therefore more resilient, AB shopping class. For this increasingly time-pressed group, making effective use of their limited leisure time is of the utmost importance. Indeed, Verdict's report revealed that the AB group is now responsible for a massive 56.8% of all online spending.

“There is some evidence that the most financially squeezed shoppers are abandoning the internet in favor of cheaper high street shopping at the likes of Primark and Matalan, particularly in sectors which retail smaller, lower priced items, including clothing,” adds Pinkerton.“But overall this is being more than outweighed by increases in bargain hunters looking for larger, branded items and the loyalty of those most financially comfortable consumers who continue to value convenience over price.”

Image: Internet shopping