Net shopping will be worth pounds 2.3bn in four years

GROCERIES WILL be the most commonly-bought item on the Internet by 2004. Then, pounds 2.3bn- worth will be sold in the UK compared to an estimated pounds 165m this year. Research released today suggests a boom for companies selling groceries, clothes and footwear online.

By 2004, forecasts Verdict Research, online shopping through the Internet and digital TV will comprise 3 per cent of the entire retail sales, compared to just 0.3 per cent today. Books, computer software and music and video will increasingly move to online sales, it says, but the most valuable sector will be food.

Many people are still wary of shopping online, afraid that their credit card details are unsafe; but such concerns tend to disappear with experience. In general, people begin cyber-buying within 18 months of going online, said Verdict.

Almost 60 per cent of Internet users said they are not online shoppers, or considering it. "Many people are using the Net just for e-mail," says Richard Hyman, head of Verdict. "But they're just finding out what they can do with it."

The next five years will also see a struggle amongst physical retailers as Internet rivals - sometimes set up by the same company - begin taking their business, suggests Mr Hyman. In some cases, the Internet companies will have to "cannibalise" the sales from their physical parents, which otherwise face extinction.

"Retailers in the UK have to differentiate themselves from each other more," says Mr Hyman. "What is happening with the Internet is unprecedented in the history of business. What's really different is the pace at which it is growing."

The number of adults online grew by 25 per cent in 1999, rising from 15 per cent of the population to 19 per cent. Verdict's figures, based on interviews with more than 6,000 British adults, show online grocery sales will grow by an average of 69 per cent every year from pounds 165m in 1999 (up from pounds 12m in 1998) to pounds 2.3bn in 2004.

Tesco and Sainsbury's, the two largest supermarkets, say they are prepared for the Internet onslaught and have already seen sales rocket. "The number of people depends on how many stores we have online," says Andrew Coker, a spokesman for Tesco. "We have 100, and we're adding five each week. For each store we have about 2,000 customers - so we will have about 250,000 online customers by year-end."

One problem is home delivery. Sarah Bain, senior analyst at Verdict, says: "The quality of timed delivery - that is, how accurately you can deliver it - may well be the thing that differentiates the winners from losers."