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U.K. retailers face e-commerce divide

Some of Britain's largest retailers, such as Tesco, are trailblazers, but most smaller shops aren't using e-business strategies at all, a new report says.

Britain's small retail companies are falling behind their larger rivals at taking up and using with e-commerce, despite government attempts to encourage U.K. businesses to get online.

A Department of Trade and Industry (DTI) study published on Monday found that while some of Britain's largest retailers are world leaders at e-commerce, a majority of smaller commercial companies are failing to use e-commerce methods at all.

As a result, the U.K. is falling behind other countries in the use of e-commerce in the retail sector, despite the government's aim to make the U.K. "the world's best place to trade electronically."

The report, titled "E-commerce Impact Study: Retail Overview," found that 23 percent of retailers surveyed make no use of e-commerce, defined as "the exchange of information across electronic networks, at any stage in the supply chain, whether within an organization, between businesses, between businesses and consumers, or between the public and private sector, whether paid or unpaid."

Fifty-six percent of the smallest retailers, such as corner shops, are failing to use e-commerce at all, according to the survey, which was conducted by PricewaterhouseCoopers.

The report warned that this growing digital divide means that many of Britain's smaller businesses are failing to benefit from the advantages of systems, such as online payment and ordering systems, and business-to-business marketplaces.

" is a global e-commerce leader while many of the small, independent convenience stores have not yet begun to think about e-commerce," the report said. British grocery chain Tesco has seen some success with its online efforts and earlier this year planted the seeds of expansion in the United States.

In total, around three-quarters of U.K. retailers are already making some use of e-commerce methods in their businesses. Some 71 percent use external e-mail, and 53 percent already have a Web site.

The government has said that it welcomes the news that some U.K. companies are leading the way by putting e-commerce at the center of their commercial thinking, but has admitted that much still needs to be done.

"The U.K.'s retailers are making progress in adopting e-commerce and developing e-business solutions. But there clearly is room for improvement, and we cannot afford to be complacent," E-commerce Minister Stephen Timms said in a statement.

Timms added that the government's "U.K. online for business" initiative, an ongoing attempt to encourage companies to use technology more, will mean companies will use electronic methods more in the future.

"E-business technologies offer a wealth of benefits. In order to exploit these we must help create the right culture throughout the business community so that U.K. firms of all sizes can seize the competitive advantage. U.K. online for business is leading the way in getting business online, and the Government's aim to make the UK the best place in the world for e-commerce," Timms said.

ZDNet UK's Graeme Wearden reported from London.