UK online spending continues to rise

£4.5bn in May, up 1.6 per cent on April

Ian Williams, vnunet.com 20 Jun 2008

Online spending in the UK hit £4.5bn in May, an increase of 1.6 per cent on April, according to the latest IMRG Capgemini e-Retail Sales Index.

Despite worries over the economy, and the rising cost of fuel and food, an average of £73 was spent online by every person in the UK in May, marking a year-on-year increase of 30 per cent.

"Online sales across the board are more robust than on the high street," said Anthoula Madden, vice president of Capgemini UK's Consumer Products and Retail Team.

"But falling property prices and persistent news of a credit crunch are causing UK shoppers to become more careful with their disposable income."

Madden explained that the current economic climate means that e-retailers must be ever more innovative in attracting new customers by providing an integrated multi-channel offering.

Although overall online spending was up, growth was confined to the clothing, footwear and accessories sector which rose four per cent on the strength of summer sales.

Other sectors struggled, however. Online sales of electrical goods fell by 10 per cent, and spending on alcohol dropped by 11 per cent.

"Increasingly when you talk to people, internet shopping is just their normal way of doing things and buying stuff," said Jo Evans, managing director of IMRG.

"Millions of us just never think of going out to see what might or might not be in the shops anymore, and many young people would not even know how to.

"To them it is the high street that is the alien shopping environment, and the internet is all they know."

However, analyst firm Point Topic has questioned the IMRG figures, claiming that its own research points to growth levelling off.

"The IMRG number looks much too high to me," said Tim Johnson, chief analyst at Point Topic.

"If it is right it means that online shopping is now as big as Tesco, and consumers are spending one pound in every five over the internet.

"There is still some growth because more people are logging on to the internet, but it is more like five per cent a year than 30 per cent."

Point Topic's estimates suggest that spending by families with internet access at home is running at about £18bn a year.

Falling sales of traditional online shopping products are being countered by increasing big ticket items being bought online, according to the analyst.

See also: