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Flight online in search of bargains

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There’s mounting evidence today of a consumer flight online in search of bargains, according to the latest IMRG Capgemini e-Retail Sales Index. It found that in September UK shoppers spent £4.8bn online – a rise of 24% compared to the same month last year.

But while UK consumers were spending an average of £79 per person online, high street sales were falling. Last week’s British Retail Consortium (BRC)-KPMG retail sales index figures showed non-food like-for-like high street sales fell by 0.4% in the third quarter. In September like-for-like sales across categories rose by just 0.5% but non-food sales was down compared to the previous year. But the BRC figures also showed strong growth online, at 19.1%, driven by discounts and promotions.

Today’s IMRG research shows internet sales of clothing, footwear and accessories improve by 28% in September, compared to the previous year. All categories saw growth, with the exception of home and garden, which fell by 1%. Multichannel retailers continue to do best online, as a group growing sales by 31% compared to 15% for pure plays.

Chris Webster, head of retail consulting and technology at Capgemini, said: “The disparity between these figures [high street and online] reveals a very interesting trend amongst British consumers. Purse strings are getting tighter as concerns about the Government’s austerity drive begin to have an impact on consumer spending confidence. The rise in online spending is at the expense of high street sales and we may even see an early peak, with shoppers looking to spread the cost of Christmas over several pay cheques.”

That, says the research, is supported by a large rise in sales of gifts in September, up by 32% year-on-year and by 8% since August.

Tina Spponer, director of information at IMRG, said: “Despite a continuing decline in consumer confidence the online retail market is growing ahead of our expectations, with a double digit rise in yearly sales recorded in each quarter of 2010. Concerns over the impending Government spending cuts, VAT increase and job security, together with falling average households’ disposable income, are all contributing to driving this positive e-retail performance as consumers turn to online retailers to secure the best deals.”

The report also forecasts that £17.4bn will be spent online in the fourth quarter of the year, with £6.4bn will be spent online in December alone, 16% higher than last year. Last week Verdict Research predicted £8.1bn would be spent online during the festive season.

Retailers also reported evidence of a trend towards early Christmas sales. Alison Wade, head of marketing at said: “In this difficult trading environment we are seeing people planning their Christmas shopping further in advance than previous years.”

Paul Zimmerman, managing director, at said September sales were up by 35% year on year in September. He added: “Our top ten best-selling products (in terms of revenue) were the more fun, less expensive items with an average price of under £20.”

Bruce Fair, managing director of Kelkoo UK, said: “The retail industry is traditionally viewed as a leading indicator of economic trends and results this Christmas will prove vital in stimulating retail growth and overall economic recovery. The fact that online sales have risen in September despite consumer confidence dipping below expectations is an indication that the Web is set to mount a real challenge to the dominance of the high street in the crucial run-up to Christmas.”

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