Online retailers make life hard for high street shops

London Briefing:   I am never going to buy anything electrical from a high street retailer again

London Briefing:  I am never going to buy anything electrical from a high street retailer again. From now on, it's strictly online shopping for me. Disillusionment with various establishments - PC World in particular - stems from a growing realisation that technology has run well ahead of virtually anybody who works in these organisations, writes Chris Johns.

Some time ago, when shopping for components for a home wireless network, I was chatting with a sales assistant about the relative merits of different pieces of kit when a thought struck me. I asked him: "You haven't got a clue what I am talking about, have you?" A little direct perhaps, but the chap replied quite cheerfully: "No, I haven't."

More recently, I endured the frustration of trying to buy a laptop PC while the salesman thought I was trying to purchase an extended warranty. I would ask: "How much memory does it have." Answer: "Well, if you buy an extra three years protection, you need not worry about it falling into your swimming pool."

After 20 minutes or so, I left. The salesman lost his sale and the store lost a customer. I don't think my experience was unique.

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Funnily enough, I think the retailers themselves have begun to realise that technology itself is changing the way we shop. A lot of people now do their research online, prior to making a visit to a store. Hence, for those who do a lot of research, the greater the tendency to know more about the products than the people who sell them.

But the habit of walking into a store is difficult to shake off, even in an online world. Perhaps this too is finally changing. Dixons, the photographic and electrical retailer, is to leave the British high street after 70 years of existence. Well, sort of. The Dixons brand is moving online, while the 190 stores that are left behind are to be rebranded under the Curry's logo (Dixons in Ireland is unaffected).

Some reports have suggested that the existing online bit of Dixons has been growing at a rate of 50 per cent, which is perhaps reason enough to abandon "bricks and mortar" retailing. So, customers seem to be learning to live without the visit to a physical store. Habits are changing again. Given my experiences, I think I know why.

One of the best online tech retailers, according to my technophile friends at least, is a company called Dabs.com. In a curious move, telephone giant BT has recently announced that it will be paying £30 million (€43.7 million) for the privately held Dabs. BT could, perhaps, be responding to Dixon's move, but BT can hardly be thought of as a retailer of consumer electronics - at least not in terms of its core business.

BT plans to offer its full range of products and support services online, aiming "to enhance its position as a leading retailer of converged IT and communications products and services". So perhaps there is life after free telephony, after all.

As more and more retailing activity goes online, it will get harder to measure the aggregate behaviour of the consumer. And the lives of already beleaguered mainstream retailers will get even harder. So far, this has not mattered very much: growth of online shopping has been very strong, but from such a low base that the actual level of sales has barely registered (assuming we are measuring things accurately).

According to market analysts Verdict, British consumers bought £8.2 billion of goods online last year, up nearly 29 per cent from the year before. These are serious numbers: Verdict says that £9.4 billion was spent in bricks and mortar department stores (these figures do not include food retailing) in 2005. We can't be too far away from the point where internet shopping exceeds the money spent in large stores.

The ability to research a product before buying is already having profound consequences, and it's not just about physical goods: we can, for example, access the opinions of thousands of other people about the quality of just about any hotel in the world. All of this empowers consumers in terms of the prices they get charged - rip-offs become less prevalent in a world of free and ubiquitous information - and the quality of things they buy.

Just how any bog standard retailer is supposed to be able to make any money in such a world is completely beyond me.

Chris Johns is an investment strategist with Collins Stewart. All opinions are personal.