Robin Goad, Director of Research at Hitwise, said, “UK Internet traffic to online retailers decreased by 0.5 per cent between October 2007 and 2008, the first annual decline this year. Up until now, online retail has been surviving the economic downturn, but this month's data proves that the sector is not immune.

“Despite the overall decrease in traffic to the online sector, budget retailers are benefiting from the demands of more price-conscious consumers. UK Internet searches for second hand goods have increased 22% over the last 12 months and, as a result, traffic to Classified Retailers increased by 47% over the same period.

“Supermarkets are also benefiting. UK Internet traffic to supermarkets is up 10% year-on-year. Although there has been a small increase in demand for online grocery shopping, the main growth area for supermarkets has been high-ticket consumer electronics goods.

“Online consumers searching for laptops and washing machines are increasingly ending up at sites operated by the likes of Tesco, Asda and Sainsburys. The supermarkets are driving this traffic by investing heavily in search marketing campaigns.”

Retailers also suffered a significant rise in business failures according to the latest Insolvency Report and Distress Index by Experian. Business failures in the non-food retail sector rose by 17.4% compared with last October. At the same time, retailers seeking administration orders leapt by 52.9% in the last 12 months and 31.0% in the last month alone.

Commenting on the problem of retail over-capacity, Jonathan de Mello, Director of Retail Consultancy at Experian, said, “This year has seen the opening of an unprecedented number of new shopping centres and whilst some have clearly moved their towns up the retail rankings, such as Liverpool from 15th place to 5th place, others have had less of a positive impact, particularly in the current economic climate.

For every winner there is a loser and Liverpool has clearly had a negative effect on nearby towns such as Wigan, and even on the rest of Liverpool itself, with John Lewis moving into the new Liverpool One scheme.”