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News - 4 February 2004
5.8% share of the market

Window(s) shopping

Online retailing is booming at a far faster rate in Britain than any other country – even America. Why has it caught on so successfully in the UK and what does it mean for traditional bricks and mortars retailers?

Forrester Research – an American based tech consultancy firm – have placed the UK well ahead of the field with estimates of 5.8% of all retail sales happening online in 2004 compared with 5.7% in America.

After a decade of warning that online sales would take off they eventually did in 2003. November and December 2003 saw a 60% increase is sales from the previous year, which may partly explain the dire performance of many traditional retailers (see earlier stories in Knowledge Base under Sector News/Retail).

There is no doubt that as the penetration of both computer ownership and broadband continues in the UK population online sales will increasingly eat into the market share of shops and stores. Some sectors will do better than others because the medium lends itself to certain types of product. Electrical and computer goods and music are ideal because they are relatively expensive but do not require close inspection before purchase. Consequently competitive pricing and convenience make them ideal for online purchase. Shoes, clothes and furniture are all harder to sell online because they require a certain amount of testing before deciding.

All of these factors are the same for other countries as well so it is interesting that the UK population has taken to online shopping with more gusto than our European cousins. The reason may be that goods in the UK are just more expensive than on the continent and consequently people are prepared to put more effort into finding a bargain. The cost of the goods is in part a reflection of the higher overheads involved in running retail outlets. By contrast American retailers already offer fiercely competitive prices in high street outlets relying on volume to offset reduced margins.

Every retailer that does not have a web presence should investigate the feasibility and the benefit compared to the cost. They should also explore the competition that does have a web presence to see if they are missing a trick.

The Business Forum and the Economic Partnership in association with Sussex Enterprise are hosting a free event on 27th April in the Dome, Brighton that will show retailers a wide variety of technology that can help them to increase their profitability including a web presence. For details and an online registration form click on the Retail Revolution box on the home page.

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