AndreyPopov via Getty Images
By Tatiana Walk-Morris
Source: www.retaildive.com, July 2022

Dive Brief:

  • Thanks in part to pandemic-induced growth, FTI Consulting predicts that online retail sales will reach $1.07 trillion in 2022, a milestone that pre-pandemic the firm predicted would occur in 2025.
  • By the end of 2022, the share of online retail sales excluding auto and gas will be 22.1%, up from 20.8% in 2021 and 15.2% in 2019.
  • The report also predicts that e-commerce sales will exceed $2 trillion by 2030, and online sales will comprise 31% of the market share by the decade’s end.

Dive Insight:

FTI Consulting predicts online retail sales will hit the $1 trillion milestone in Q3 this year, a doubling from four years prior. In the early stages of the pandemic, shoppers avoided stores to contain the spread of Covid-19, driving up e-commerce spending and creating what FTI described as “four quarters of hypergrowth.” But now, shoppers are more anxious about high inflation and a potential recession that could upend their finances, the report said.

“[T]he rocket-like growth of online retail during COVID-19 certainly will moderate. Online sales in the past two years were driven by necessity — shopping from home due to stay-at-home living and work conditions — as well as more discretionary income due to government stimulus, a speedy jobs recovery and increased savings,” J.D. Wichser, leader of the retail and consumer products practice at FTI Consulting, said in a statement. “This will modulate over time, exacerbated by recent inflationary pressure, which is expected to slow total retail spending over the second half of 2022 and is quickly becoming the primary source of stress for consumers, who don’t know how long it will persist.”

Adobe made a similar prediction on e-commerce spending last year. In early 2021, the company forecast that e-commerce spending would reach $1 trillion in 2022.

However, the spike in e-commerce sales hasn’t been all beneficial to retailers, and physical stores are expected to remain an important channel. A 2021 Forrester report estimated that nearly three-fourths of retail sales in the U.S. will still occur in physical stores in 2024. Operating as an online-only retailer also remains a challenge: A survey of international retail leaders conducted by Ipsos for Publicis Sapient and Salesforce found that 44% of online-only retailers were not profitable, compared to 20% of brick-and-mortar retailers that said the same.