Online sales hit new high at Christmas

Internet retailers see strong end to year, while high street sales fall 1.4 per cent

While high street retailers fight for survival, shoppers are turning to the internet. Shoppers spent £4.67bn online last month, up 14 per cent on 2007, according to the latest figures, giving e-retailers their best ever Christmas.

By contrast, high street retail sales fell by 1.4 per cent in December, the worst Christmas for at least 14 years, according to the British Retail Consortium. The household names Woolworths and MFI have gone bust as shoppers trim their spending in the downturn, while the retail chains Land of Leather and Zavvi are fighting to stay in business, having been placed into administration.

The monthly update from thee-tailing trade body IMRG suggests that, in the credit crunch, two-thirds of consumers spent more at websites this year than last year, with average online spending per person in Britain reaching a total of £76.67.

Shoppers appeared to be logging on to buy Christmas alcohol, with sales up 13 per cent on November. Gifts and electricals were also up 7 and 5 per cent respectively. Almost four million people went shopping online on Christmas Day, rather than waiting for the sales to begin in town centres on Boxing Day – 21 per cent more than 2007. However, health and beauty sales fell, IMRG said, perhaps reflecting steep discounting in high street retailers such as Boots and Superdrug.

Overall, online sales hit £43.8bn in 2008 – about 15 per cent of total retail spending in Britain.

IMRG – whose 70 members include Marks & Spencer and John Lewis – forecast that sales would continue rising by 15 per cent a year for the foreseeable future – hitting £50bn this year – as more people tried "clicks and ticks" shopping and as a result of quicker and cheaper broadband.

By 2020, IMRG expects that 90 per cent of transactions will either be over the internet or influenced by the internet. "There's a lot wrong with it now: delivery and the legal infrastructure," said James Roper, the head of IMRG. "It's getting a lot better and there's lots of potential."

But he said some major retailers – which he declined to name – were failing to deliver goods on time because they had "bolted on" websites to their high street operations, rather than having a proper online service. But it would seem that the credit crunch is also taking the edge off the strong growth of internet retail. For the first time since 2002, internet sales fell from November to December last year, down 2.5 per cent, or £71m.

Mike Petevinos, the head of retail consulting at Capgemini, the company that produced the figures, said a large reason for the fall was Christmas fell on a Friday in 2008, pushing the busiest shopping weekend from the first week of December to the end of November. Mr Petevinos said: "Our research provides further evidence consumers are turning to the internet in the downturn."

£43.8bn

Total value of online sales in 2008 – roughly 15 per cent of retail spending in Britain.