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For traditional stores, online shopping has become a cause for concern in a difficult retail environment. The Internet is accounting for more spending than ever. In addition, It also makes it easier for consumers to compare prices in across a far bigger selection of items than a trip to the high street.
'The way the Internet encourages people to shop about is having a big impact on the market,' says Nick Gladding of Verdict Research, a consultancy. Internet retailers have been able to offer cut- throat prices because they do not have to bear the cost of running a physical shop.
Price-comparison websites, such as Kelkoo, where a shopper can compare compare prices on any product from DVDs to Prada perfume to get the best deal, make the market even more competitive. 'It is a lot more competitive online because you are always just one click away from a rival,' says a CEO.
Retailers selling electrical goods have been particularly hit by the Internet, as items such as televisions and DVD players become more common purchases. This creates a dilemma for retailers who sell products both online and in shops.
Some bricks-and-roortar retailers are adopting a model of dual pricing in order to keep their position online while maintainig margins in their shops. Mr Gladding says dual pricing will become harder to practise as consumers become better at surfing the Internet, 'In the longer run, prices must come together,' he says.
To be successful in operating in the online and offline world, retailers should probably try to integrate the two as much as possible. Some businesses, for example, have set up their operation to allow customers to shop online, over the telephone or in stores.