LONDON: The UK's credit squeeze is already apparent in the nation's high streets where consumers are increasingly conspicuous by their absence, but online shopping is doing a roaring trade, according to Verdict Research.

Its latest figures indicate that online retailers saw sales climb 35% to £14.7 billion ( $27.2bn; €17.7bn) during 2007 - fuelled in part by improvements in retail websites, the expansion of broadband and the convenience factor.

Now, hard-pressed purchasers are using the web to hunt down bargains.

Says Verdict's senior retail analyst Malcolm Pinkerton: "Disposable incomes are being squeezed and what is drawing people online is the perception that the internet is cheaper and that they can shop around to get bargains and lower prices. 

"Broadband is also cheaper and it has broadened the spectrum of people who can shop online."

Last year's figures show electricals and grocery accounted for just under half of online retail spend, with electricals taking the biggest share of 25.1%.

Verdict forecasts online grocery will take the top spot at 29% of online sales by 2012, compared to 22% for electricals.

The increasing popularity of buying food over the internet is confirmed by upmarket online grocer Ocado, which says its sales are growing at 25% yearly, with the average transaction value £115.

Wal-Mart-owned Asda's multi-channel director, Tony Prescott adds: "In the last two years, growth in grocery [online] has been massive and we expect to accelerate this over the next five years."

Verdict predicts online will grow from 5.2% of all retail sales in 2007 to 13.8% by 2012.

But Pinkerton says retailers need to devise strategies to drive online customers to their stores, such as reserve and collect, and vice-versa.

He continues: "It is about providing as many routes to market as possible."

Comments David Smith, director of operations at etailing trade body IMRG: "The big thing is that retailers need to be online. Next and M&S have had a pretty tough time on the high street recently but their online sales have been much better."

Data sourced from The Independent (UK); additional content by WARC staff