Online Shopping Continues Momentum
navpoint / December 13, 2022
In 2020, the world was turned upside down in the face of the virus whose name we do not speak. This gross upset to normal life disrupted more than in-person Sunday service and in-person school. The virus disassembled the strong US economy in what many called an artificial recession. While almost every form of business saw a dip in their YTY sales and revenue numbers, one market grew larger and faster than any in US history. e-Commerce sales jumped from $657.1 Billion in total revenue to $888.5 billion in 2020. This 35.2% jump in year-over-year sales represents a change in shopper behavior that was partially out of necessity and partially a permanent shift away from in-store shopping.
In 2019, e-commerce sales accounted for roughly 12% of all retail sales. In 2020, online retail sales accounted for over 15% of total retail sales. Online retailers took 2%+ of a $5.7 trillion industry. This unprecedented increase in market share has continued despite the world’s return to normalcy. In 2021, the share of online to total retail sales dipped below 15% from the 2020 record high. However, the shift that occurred after the Pandemic seems to have been permanent as 2022 sales again skewed towards online retail as opposed to in-store. From Q3 2021 to Q3 2022 total retail sales were equal to roughly $7 trillion. Of this, e-commerce totaled $1.02 trillion. This is the second year in a row that e-commerce was over 14% of retail sales. The 2020 jump is no longer a blip in the numbers, but a lasting shift in the way consumers buy products. Historically, when the market changes in such a drastic fashion, the way we perceive opportunity needs to change with it. Creativity and guile will be required in the coming years as our marketplaces experience violent change. [1]
If the in-store retail market experiences a significant decline due to online shopping, what will be the fate of retail real estate? If the world moves to online retailing, many retail shopping centers will need to be renovated and retrofitted to satisfy different uses. A likely replacement would be the warehouse/flex industrial type spaces. If you aren’t displaying the product, you likely use the buildings you lease to store your inventory. While it may be too soon to speculate about the future of retail real estate, prudence is preparation for future hardship and opportunity. While you hide and watch as the world recovers and reacts to the economic recession, enjoy your Christmas shopping. There is no time like the present to find good presents. From the NavPoint Team, Merry Christmas.
[1] All data was pulled from the United States Census Bureau
https://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf
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