Ikea joins the e-retailing revolution.
Internet shopping is growing at the fastest rate in six years, shrugging off the gloom being seen on the high street.
Online spending on retail purchases rose by 35% to £14.7bn last year as the number of internet shoppers hit an all-time high, according to Verdict research. The rate of growth is almost 10 times that of the overall UK retail market.
This growth is set to continue thanks to faster broadband, with online retail predicted to rise to £44.9bn by 2012, amounting to 13.8% of total spend.
The number of online shoppers rose 24.7% to 22.6 million last year.
Yet, despite some degree of cannibalisation - people switching to the internet to buy what they would previously have gone to the shops for - physical shopping is far from doomed, Verdict said.
"In many cases, online and in-store sales channels will blur into one, becoming fully integrated," said Malcolm Pinkerton, senior retail analyst at Verdict. "There is still a need for physical locations but the number of stores required will vary according to sector. With the rise in music downloads, there will not be such a need for music and video stores, for example. Having an internet presence is now vital and the combination of an in-store and online presence, with strong links between the two, is essential."
Electrical goods and food and grocery made up just under half of all online retail spending in 2007. Music and video has the highest online penetration at 30.8% of total sales.
Online shoppers are purchasing more frequently (an average of 16.9 times last year, an increase of 2.7 times on 2006) and each spent an average of 7.8% more than in 2006.
Convenience is the main factor cited by more than half of online shoppers from the 4,059 people surveyed.
"The internet is widely perceived as a cheaper and easier way of finding lower prices and bargains in most sectors," Pinkerton said. "As the cost of broadband falls, consumers become accustomed to internet shopping and retailers continue to enhance their online propositions, the channel will find itself well-placed to capitalise on the falling consumer confidence and lower levels of disposable income impacting the retail market."
In the long run, growth will be driven by the ageing population - as today's younger shoppers get older and their spending power increases, they are likely to spend more online.
Last year, new entrants to the online retail market included home-furnishing retailer Ikea.
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