IMRG E-Retail Sales Index: web eats into high street takings

Online sales for the first six months of 2008 were up 24% to £26.5bn - equivalent to almost half of all supermarket sales - according to the IMRG...

Online sales for the first six months of 2008 were up 24% to £26.5bn - equivalent to almost half of all supermarket sales - according to the IMRG Capgemini e-Retail Sales Index.

Web sales are starting to eat into high street sales as consumers turn to the internet to find bargains. The British Retail Constortium said UK retail sales fell 0.4% on a like-for-like basis, compared with June 2007. "Sales have now been lower than a year ago in three of the past four months, the worst since summer 2005," it said.

Online sales represent 17p in the retail pound. The growth rate halved from a pre-Christmas 50%-plus, but IMRG chief executive James Roper expected online sales for Christmas 2008 to hit new highs.

"The dip is normal for this time of year, but it is exaggerated by the credit crunch," Roper said. "While credit is scarce people will go to the internet to find the best prices and more choices than they can find in a store," he said.

Roper said the UK's online market was hollowing out. Visits to mid-market online stores had fallen 6% since June 2007, but visits to value sites such as Primark were up 12% and top-end retailers such as Harrods were up 14%, he said.

A roundtable discussion on the results suggested that retailers were reviewing the role of the high street store. Apart from displaying goods, they were also expected to act as warehouses for online sales and as receiving centres for returned goods. This required a high degree of integration between the retailer's information systems to prevent fraud, they said.

Catherine Hall, director of online marketing at said many retailers were updating their in-store electronic systems to prepare them for further integration into the online world.

Roper said retailers' main investment priorities were store systems, merchandising systems, and web development. The industry was also working on payment and data sharing schemes to cut the risk of fraud in online sales. But it was up to the banking sector to show the way, he said.

Delivery of ordered goods was a constant problem, delegates said. This was because half the population was out of the home during working hours.

Tim Jones of GeoPoint said the key was to deliver goods to the right person at the right time to minimise administration costs and carbon costs. His company had developed a system that sent text messages to customers to warn them when to expect a delivery. This was popular with some, but depended on the store capturing the customer's mobile phone number at the point of sale, he said.

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