Bid goodbye to Oxford Street

And hello to shopping for those who hate shops. Nigel Cope looks at the opportunities offered by electronic retailing

The way people shop has undergone big changes in the past 10 years. Increasing numbers drive out of town to huge US-style malls, rather than catch the bus to the high street. The use of credit and debit cards has proliferated at the expense of cash and cheques.

But at least one thing hadremained reassuringly the same: if you wanted to go shopping, you usually had to go to the shops. Home shopping took 5 per cent of the UK retail market, but was regarded as a retail backwater. Now, however, it is rushing into mid-ocean on the crest of an electronic wave: the shops are arriving at a sitting room near you.

In the last few weeks Britain's largest retailers have fallen over each other to launch trial schemes, either on the Internet or on other online services. So far, hi-tech shoppers need a computer and a modem. But other systems being tested could mean that a television set, a remote control pad and a telephone will be enough.

In April Sainsbury, the supermarket group, started selling wine on the Internet. Just a week later eight stores groups launched "electronic shops" on CompuServe, the online information system. Subscribers who log on to CompuServe's "UK Shopping Centre" can buy books from WH Smith, wine from Tesco, CDs and videos from Virgin and hi-fis and cameras from Dixons. Love-struck boffins can send bouquets to their sweethearts via Interflora.

In the autumn BT launches the biggest UK interactive television trial yet attempted, in Ipswich. Thomas Cook will sell holidays, guide books and travellers' cheques on the system. NatWest will offer home banking services. Sears, the retail group, is setting up computer "branches" of Adams children's wear and Olympus Sports. Safeway hopes to offer a grocery delivery service that could make Sainsbury and Tesco's wine efforts look rather limited.

So far most of these systems are only trials, as shops test new ways of reaching customers. WH Smith's "bookshop", for example, offers a modest range of 250 titles, mostly bestsellers such as Edwina Currie's A Parliamentary Affair and Jeffrey Archer's Honour Among Thieves. Virgin's shop offers 500 CDs, videos and computer games with the emphasis more on Take That than Tchaikovsky.

WH Smith, which is also taking part in the BT trial, says its computer shops are a way of finding out exactly what the Internet and other systems are capable of. The company says: "It is really just another method of selling but the exciting thing is that will enable us to find out more about our customers."

Thomas Cook agrees: "People will still need the reassurance of talking to someone, particularly with more expensive items. Otherwise they will be worried whether or not they have pressed the right button, or whether their airline ticket will arrive." So while customers will be able to buy their currency and guide books direct via the Thomas Cook system, holiday and flight bookings will involve a sales person ringing customers to go through the finer points of the booking and the payment details. This is an extension of the system already available through multimedia "kiosks" in a handful of Thomas Cook shops.

Early signs are that the new virtual shopping centres are proving popular. CompuServe says that on one weekday earlier this month, subscribers were checking into UK Shopping Centre at the rate of more than one per minute. It hopes to persuade 15 more retailers to join the system by the end of the year, with travel agents, other supermarket groups and mail-order companies high on the list.

Sainsbury says it has received inquiries from as far afield as Australia and Japan, although it cannot ship abroad at the moment. In the first month of its wine service, 75 cases were ordered through the Internet. "We're very pleased with the response so far," a spokesman says. A number of US-based electronic shopping services, including CompuServe's Electronic Mall, offer to send goods overseas - could this be a way of buying cheap CDs from America?

So how far will electronic shopping go? It seems unlikely that shoppers will make large purchases on a remote system. A bridegroom would probably not buy his fiance's wedding ring on the Internet, for example. Even a man who hates shopping might actually prefer to try on his suit at Marks & Spencer than choose it from some computer graphics in an electronic mall. True, sales from home shopping catalogues such as Freemans and Littlewoods were worth around pounds 6bn last year. But few of these purchases were made by the socio-economic or demographic groups that have pounds 2,000 of computer kit in their back bedroom.

There are other drawbacks. One is the lack of security on financial transactions on the Internet (see below). Another is limited access. However fast Internet use is growing, the majority of the population still does not have access to it - and many who do are either impoverished students or office workers who cannot spend too much time shopping at their desks.

CompuServe, although not as far-reaching as the Internet, may reach more of the right sort of people. Its 100,000 UK subscribers are typically young, affluent types. "Most of them are busy professionals who don't want to go down to the shops on a Saturday morning," says Paul Stanfield, the company's shopping manager. In the US, online services such as CompuServe are now used widely by women at home - the prime shopping constituency. Europe should eventually catch up.

The BT trial involves 2,500 homes. It uses existing telephone lines through which extra data is squeezed by using technology called Asymmetrical Digital Subscriber Loop. It would, however, be extremely expensive to extend this system, or indeed any system that would allow interactive television to every house in the country. Nevertheless, if the Ipswich trial goes well, the chances of introducing a national system must be improved.

Electronic shopping also presents problems for retailers. How, for example, can they distinguish themselves from each other? Robbed of the standard methods of differentiation such as location, store design and layout, they will be left to compete in other ways. On the Internet, a branch of Our Price offering the latest Bruce Springsteen compilation would look similar to the HMV store offering the same thing. The most likely weapons will probably be price, efficiency of delivery and niche offers. A record store choosing to specialise in blues or country music might do well, for example.

On delivery, those retailers with already established networks will have an advantage. WH Smith has to put its books in the post, whereas Great Universal Stores has its own delivery system. Price is likely to be the tactic of last resort for the larger retailers, though it could be a useful weapon for smaller companies specialising in niche markets.

Tesco says it has not considered how to handle competition on CompuServe until there is some. Serious competition with different strategies and niche offers could be some way away. But one thing is clear. Shopaphobes for whom a trip to the high street on a Saturday morning is as enticing as a trip to the dentist at last have an alternative.