Crunch hit Brits turn to online shopping

Crunch hit Brits turn to online shopping

Despite the economic gloom, UK online shopping sales in the first half of 2008 were up 38% - to £26.5 billion - on the same period the previous year.

Figures from IMRG, Capgemini and the British Retail Consortium show 17 pence in every pound spent by Brits during the period was online. This is around half of the amount spent in supermarkets and more than the total spend for all retail sales of clothing and footwear.

IMRG and Capgemini say frugal Brits, hit by the credit crunch are looking online for bargains. E-commerce growth is expected to remain strong throughout 2008, driven by rising fuel costs, falling disposable income and smarter shopping habits.

However, despite faring well compared to the high street, the online channel is not immune to credit crunch woes, with a dip in growth of five per cent for June.

"Whilst online retail is not immune to the credit crunch, it is showing greater resilience than the high street," says Mike Petevinos, head of consulting for retail, Capgemini UK. "Convenience has a sharper edge in a world of soaring fuel prices and the ability to research and make more informed choices in a time of heightened price sensitivity is a key advantage of the online channel."

In the longer term e-commerce will continue to challenge the high street, with IMRG and Capgemini predicting that between 30% and 50% of all retail spending will be online in the next five years.

One important driver for this may be the increasing concern over environmental issues. According to IMRG research, 56% of people believe shopping online is greener in comparison to the high street.

One worrying side-effect of the explosion in popularity of online shopping is a rise in card-not-present (CNP) fraud. According to UK payments association Apacs, CNP fraud rose 37% to £290.5 million during 2007 and now accounts for more than half of all industry losses.

However, the payments association argues that CNP losses have to be seen in context of the huge rise in the number of people shopping online and over the phone. Apacs says CNP fraud losses have risen by 122% between 2001 and 2006 but over the same period the total value of online shopping transactions increased by 358% - from £6.6 billion in 2001 to £30.2 billion in 2006.

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