Shoppers log on to record surge in online sales

Shoppers log on to record surge in online sales: "Online shopping grew at its fastest-ever rate at Christmas as UK shoppers spent nearly £5bn on internet purchases in the 10-week run-up to the holidays, helping to make Britons Europe's top online consumers."

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Shoppers log on to record surge in online sales
By Maija Palmer, IT Correspondent
Published: January 19 2006 22:02 | Last updated: January 19 2006 22:03

internet shoppingOnline shopping grew at its fastest rate at Christmas, as UK shoppers spent nearly £5bn on internet purchases in the 10-week run-up to the holidays, helping to make Britons Europe’s top online consumers.

This was a nearly 50 per cent increase on Christmas 2004, when £3.33bn was spent. Internet shopping now accounts for about 9 per cent of all retail spending.

The figures, released on Friday by the Interactive Media in Retail Group, the industry body for electronic retailers, show that about 24m people shopped for Christmas presents online, spending an average £208. This rapid growth in internet shopping contrasts with a sluggish performance overall for the retail sector, where like-for-like sales rose just 2.6 per cent in December, following a 0.8 per cent rise in November.

For 2005, overall, online shopping grew 32 per cent to £19.2bn, with shoppers spending an average of £816 each during the year. Another study, published yesterday by the European Interactive Advertising Association, estimated that the average UK online shopper spent £875 last year, nearly double the average £452 for the rest of Europe.

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The IMRG estimates the average annual individual spend will exceed £1,000 for the first time in 2006. The group expects the UK e-tail market to grow 36 per cent in the current year to £26bn.

The increase in online shopping comes amid a rapid increase in the uptake of broadband connections, which grew 60 per cent last year, with more than 37 per cent of UK homes now having a high-speed internet line.

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The contrast between the growth of online retailers and falling sales for traditional retailers is strong evidence that e-tailers are cannibalising high street sales.

Play.com, the online entertainment and electrical goods retailer, for example, reported a 37 per cent increase in music sales in the fourth quarter and a 130 per cent increase in book sales. By contrast, HMV’s underlying sales fell 8.9 per cent at its core music chain in the 10 weeks to January 7. Ottakar’s, the US-based bookshop chain, reported a 4.9 per cent decline in sales in the 23 weeks to January 7.

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Electronic goods, such as Apple’s iPod music player, Sony’s PSP handheld games console and Microsoft's XBox 360 games machine dominated Christmas on the internet. Online sales rose 19 per cent in 2005 to £2.46bn.

Clothing and footwear sales on the internet have increased 24 per cent to £1.47bn. The sustained increase in music downl

oads, thanks to the popularity of Apple’s iTunes, has seen some 26m single tracks sold on the internet in the UK, a threefold increase over the year. The UK is now the largest and fastest growing online music market in Europe, according to the IFPI.

Additional reporting by Emiko Terazono