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Internet home shopping 'over-hyped and floundering'

Electronic home shopping via the Internet and other new media is over- hyped and floundering, according to a report published today.

It suggests that without a quantum leap in technology and a big shift in consumer attitudes, electronic home shopping will remain only a tiny fraction of retail sales.

The study, by retail consultants Verdict Research, is among the most critical yet on the potential of electronic shopping which some technology gurus have portrayed as a "high street killer". It concludes that new media such as the Internet and interactive television will still account for less than 8 per cent of all retail sales by 2010.

It criticises the Internet for being slow and cumbersome with poor graphics quality. It is also expensive to use, the report says. It concludes: "The fundamental problem is that the majority of people like shopping. They prefer to see, touch, try out or try on goods they are thinking of buying. There is nothing about the Internet that will change this."

The new study contradicts many other reports which suggest that new technology will have a fundamental impact on the way people shop. These surveys say that though Internet retail sales amounted to only $500m last year, the figure will grow to $6bn by the end of the decade.

Consultants like Hoskyns, the computer services group, predict that a combination of technological improvements and demographic changes such as the growing up of the Nintendo generation, which is more comfortable with computers, will cause a sudden explosion in the market. "We think these factors will be the trigger that causes the whole sector to take off rapidly," says Hoskyns director Lee Eskholme.

Hoskyns says that the biggest impact will not be on the high street but the out-of-town supermarkets and shopping centres which will no longer have the monopoly on convenience shopping. It also predicts the high street could make a comeback as the centre of the community with smaller shops like delicatessens and bakeries.

The last 12 months has seen a wave of UK retailers rushing to offer on- line services. In the last month Boots and Marks & Spencer have launched "Web-sites" on the Internet though they are not selling goods on the system yet.

However Sainsbury and Tesco have both been selling wine on the Internet for over a year. Dixons is selling electronic goods, WH Smith is offering books and Virgin is selling records and videos. Great Universal Stores, the mail order giant that owns the Kays and Marshall Ward catalogues, has set up 17 "virtual shops" on the Internet selling everything from sports goods to DIY equipment.

"We are serious about it and we think it is going to be an important new area of business for us," says Lesley Mingay, the company's head of electronic retailing. GUS is working on a "virtual mannequin" that will enable shoppers to choose a garment, key in their vital statistics and see it displayed on a graphic image on the screen.

Many retailers are nervous about the impact of electronic shopping, which they fear will take consumers out of their stores and leave them with a redundant portfolio.

Already a large numbers of "virtual retailers" are springing up in the US. They have no shops and sell direct to customers at lower prices. Amazon Books claims to be the world's largest bookshop with more than a million titles on offer. But it has no shops, only a huge warehouse outside Seattle. The Internet is also seeing a host of new services springing up catering for specific groups. One is Shop UK, which offers a service aimed at homesick expatriates and Anglophiles.

Run by a family in Buckinghamshire, it offers to buy anything readily available in UK shops and deliver it anywhere in the world. Though quintessentially English favourites such as marmalade and Branston Pickle are offered, the most popular requests are for Marks & Spencer clothing and tea.