The top 50 shopping websites

Internet shopping could account for half of Britain’s £300 billion-a-year retail market by as early as 2018 after coming of age this Christmas, it was predicted yesterday (see Commentary, facing page).

James Roper, the chief executive of Interactive Media in Retail Group (IMRG), the internet retail monitor, said that the pace of change would be unprecedented over the next decade, as stores have been left with little choice but to improve significantly their online offering to protect sales.

He argued that town planners were already taking the web into account, given the potential need for parcel distribution depots on the outskirts of cities and big towns.

IMRG believes that consumers have spent a record £53 billion online this year, up 75 per cent on last year and a market share of 17 per cent. More than £17.5 billion has been spent online since the start of October alone, another all-time high. IMRG includes leisure and travel spending in its calculations.

Its comments came as hundreds of thousands of bargain hunters continued to flock to Christmas sales. Shoppers were queueing outside Gucci in the West End of London, and Harrods estimated that it was taking £1 million an hour during peak trading yesterday, as the world-famous store began its winter sale.

SPSL, the footfall analyst, said that the success of the sales reflected the “buzz of buying a bargain on the high street”, but it added that retailers had to react to the rise of the web.

Brian McBride, managing director of Amazon UK, said that stores needed to “shape up” or face being squeezed out as a result of the internet revolution. He believes that the online retail market will double or treble over the next two to three years.

He said: “Being mid-range is no longer going to cut it. You’re going to either have to offer value like Primark or great service like John Lewis or Marks & Spencer. The internet has certainly come of age this year.” Experts believe that this year has produced a breakthrough for the internet, as the growing use of broadband has coincided with not only an increasing confidence in buying online but ever more time pressure on consumers. Half of all homes in the UK – about 13 million – now have broadband internet connections.

Mr Roper said: “Four factors have come together at once: familiarity, availability, confidence on the part of consumers and investment on the supply side. This year has been a great surprise to us. The market has been growing at twice the level we expected. We were looking at the internet taking a 25 per cent share of the retail market by 2011 or 2012, but we’re having to bring these targets forward. Half of all transactions could be online by 2018.”

Marks & Spencer was one of a number of high street chains that kick-started their traditional Boxing Day sales on the web on Christmas Day. M&S relaunched its website in March after bringing in Amazon to improve functionality, and traffic on the site was up 60 per cent last month on a year ago.

PricewaterhouseCoopers (PwC) believes that more than two thirds of the population – 68 per cent – will be shopping online by 2011, compared with 54 per cent today, as more over50s use the web for the first time.

Mark Hudson, the retail and consumer leader for PwC, said that it was impossible to predict how big the internet could be, but he put the size of the online retail market at 5 per cent of the total now and predicted that it would double to 10 per cent by 2011.

He said: “The internet is experiencing rapid growth, but there are constraints, given the extent of retailers’ current operations on the high street and the costs of distribution, logistics and problems with the delivery infrastructure.”

Amazon led the internet revolution in the UK almost a decade ago when the US-run business bought Book-pages. It is still the UK’s most popular website, in front of Play.com, the CD and DVD website, and Tesco.com.

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