The internet has long provided refuge for minority views and niche interests. It seems that US shoppers may be hiding out there as well. Overall retail sales are in retreat – down 10 per cent year on year in the first quarter, excluding food. But online spending is holding up remarkably well: Credit Suisse estimates that e-commerce (excluding travel bookings) was down just 0.5 per cent for the same period.

The breakdown of online spending does reflect broader trends. Sales of office supplies dropped by more than a quarter, while books and magazines were up by almost a fifth, as the country switches to cheaper pastimes. The largest category though, apparel and accessories, dropped just 0.6 per cent in spite of its more discretionary nature.

In part that reflects the favourable demographics of the internet shopper. Before being able to buy online, a consumer has to be able to afford the hardware and the connection, or at least work in a desk-based job that provides the opportunity to browse. And greater price sensitivity encourages shoppers to compare prices online. As good results from Apple this week demonstrated, consumers can still be persuaded to part with cash.

As with Wal-Mart, trading down has also helped Amazon, its online equivalent that takes more than 8 per cent of US online sales. Growing that share, largely at the expense of Ebay’s shrinking marketplace, helped Amazon this week to report a gutsy 18 per cent sales growth performance. But investors, who reward the stock with an astronomical valuation of 54 times prospective earnings (versus Wal-Mart’s 14 times) should beware its Achilles’ heel. Amazon has grown by replacing physical retailers. Yet half its sales are the types of media – films, books and music – that will soon be downloaded direct. The shift to shopping online is only the beginning of the story.

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