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LONDON - The retail industry is undergoing a revolution.
As techno-savvy consumers increasingly go online to shop, internet sales are booming and bricks and mortar businesses are following specialist e-retailers onto the web.
The fashion retailer ASOS, which specialises in selling versions of celebrity outfits online, yesterday posted an 111 per cent increase in annual sales.
Taking aside the fact that last year's comparatives were hit by the explosion at the nearby Buncefield fuel depot, turnover was still up around 80 per cent.
And in March, ASOS recorded its highest traffic levels ever, with more than 2 million visitors to its website.
Research published this week by IMRG, the industry body for global e-retailers, reveals that £42bn will be spent online by UK shoppers this year, which is equivalent to London's West End sales nine times over and also matches the turnover of the supermarket giant Tesco.
Some 860 million parcels will be shipped to the UK's 26 million internet shoppers and each online consumer will spend £1,600 on average.
It is just 13 years since the first secure internet shopping transaction took place in August 1994 with the sale of a CD in the US.
By the time of the dot com gold rush in 2000, internet sales had reached £800m a year.
Despite fears over the future of the internet after the dot com bubble burst and initial consumer concerns about the safety of shopping by credit card online, e-commerce sales have exploded over the past six years, growing by a whopping 3,500 per cent.
James Roper, the chief executive at the IMRG, says that, in much the same way that the concept of self-service transformed the way people shopped from over-the-counter style transactions, self-service online will transform the way people consume.
Traditional retailers have to concentrate on the mass market as they only have the shelf space and time for the best-selling products, he says.
But with the internet, consumers have unlimited choice.
"It is a bigger market place and consumers can find precisely the product they want rather than just what is available in the shops," he said.
"You can get products from anywhere in the world. The traditional retail model is not geared up for that."
As the IMRG reports said: "The internet does not recognise boundaries and is creating a huge global shopping marketplace, worth £250bn in 2007.
More than a billion people use the internet, some 17 per cent of the world's population, of which almost a third live in Europe.
"Developing a thriving e-commerce sector that reaches beyond national borders will become vital for the competitiveness of every country's economy," the report continued.
Nick Robertson, the chief executive of ASOS, said one of the biggest factors in the growth of online fashion retailer has been the proliferation of broadband.
"Due to broadband we are able to showcase our products in a more favourable way, for example with the use of catwalks," he said.
The other key factor pushing increasing numbers online is convenience, he said.
"Girls don't have the time to go to the shops in their lunch hour.
By shopping online they can get items delivered to their place of work." As he points out, 96 per cent of 15-year-olds have bought online.
"Their perception of stores isn't based on what the high street have given them for 100 years," he said.
"It is based on their experience online."In a cash-rich, time-poor society, shopping online would appear to be the ideal solution.
The popularity of eBay, which announced that its annual profits soared by 52 per cent to US$377m earlier this month, has shown the consumer's willingness to search for bargains online.
The Californian-based company said sales in the UK showed the greatest surge last year, with a 26 per cent rise in the number of registered users.
Many of the big names retailers are seeing the internet as an opportunity.
The supermarket giant Tesco said its online sales reached £1.2bn last year while John Lewis, Next, Debenhams and Comet have all seen soaring online sales.
According to new research carried out by the IMRG on shoppers' habits, around half prefer to purchase consumer electronics online with just 30 per cent preferring to buy them in store.
Similarly, more people want to buy gifts via e-commerce (42 per cent) compared to 28 per cent of consumers who want to buy gifts from a shop.
However, for clothing, footwear and jewellery the majority of people still prefer to visit the high street (63 per cent) as opposed to shop online (24 per cent).
Yet, in a similar way to window shopping, consumers will research products on different websites before hitting the high street with their credit cards.
Nick Bubb, retail analyst at Pali International, said: "A lot of people still want to look at things before they buy.
They will do the research online and then go and shop outside."Another analyst added: "I don't think we can assume a mass shift to online. People like to browse and impulse buy."
And as Mr Bubb pointed out, ASOS, as steep as its growth has been over the past couple of years, is still relatively small fry.
Around half of UK retailers did not have an online store at the beginning of 2007, including the department store Selfridges, the supermarket chains Morrison and Somerfield and the low-cost clothing retailer Primark.
Instead, their websites are being used to showcase products and give details of stores.
"Retail is about serving consumers in the way they want, but a lot of retailers think it is about having brick and mortar shops," said Mr Roper.
Certainly when it comes to convenience, online appears to win hands down, certainly for products that are easy to post or that consumers wish to buy in bulk.
DVDs, CDs and books are the perfect example.
Shoppers know exactly what they want; it is simply a case of finding the cheapest retailer online.
However, when it is a question of something more personal, such as the perfect dress and piece of jewellery to match, consumers often prefer to see the item for themselves.
They enjoy the whole experience, the pleasure of trying products on or simply browsing and planning a future purchase.
One retail analyst said that the traditional retailers that may prove ultimately more successful are those that go multi-channel by integrating their website with their brick and mortar operations.
"That is the next logical step," he said.
"Websites will become more sophisticated. You will be able to order online, then arrange to go and pick it up yourself from a distribution point."
- INDEPENDENT
