eCommerce Has Just Jumped Forward by 5 Years

Practical Summary:

• eCommerce has accelerated amid the COVID-19 pandemic
• Online sales (excluding restaurants / gas) will represent over 25% of total US retail sales in 2020 versus 16% in 2019
• Some of the early winners were the established eCommerce brands, notably Amazon, Walmart, Target and eBay
• More recently, a next leg of growth has kicked in , and it is being driven by 1) new verticals, 2) new consumers coming online, and 3) emerging technologies … this article argues that these three trends will continue well beyond 2020

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The coronavirus pandemic has been the most disruptive event to the retail sector in decades. Supply chain interruptions, huge swings in consumer demand, and shifts in retail channel preferences have dramatically altered the complexion of commerce in 2020.

COVID-19 effect

Since March 2020, we have seen a number of major retailers declare bankruptcy — department store Neiman Marcus and JC Penney; New York City-based gourmet foods retailer Dean & Deluca; amusement park operator Apex Parks; New York department store chain Century 21; apparel makers True Religion, Lucky Brands, Ascena, Brooks Brothers and J Crew; fitness chains 24 Hour Fitness and Gold’s Gym; home goods retailer Pier 1 Imports and Tuesday Morning; auto rental market leader Hertz Corp; health retailer General Nutrition Co; and entertainment company Cirque du Soleil.

Indeed, eMarketer forecasts that total US retail spending will decline by 10.5% this year, to $4.894 trillion … that would be the largest annual drop ever recorded. The only drop that’s close came back in 2009, when retail sales (including autos and fuel) fell 8.2%.[1]

2020 will be a record year of retail bankruptcies. Coresight Research predicts U.S. retailers will shutter 20,000 to 25,000 stores this year, with up to 60% of the closures hitting U.S. malls.[2] The forecast was recently ratcheted up from 15,000 closures predicted before the COVID-19 crisis began. The 2020 closures are expected to break last year’s record 9,802 closures tracked by the firm.[3]

Impact on eCommerce

One of the bright spots in this gloomy landscape is eCommerce. The chart below shows where I think eCommerce penetration (the online share of total retail addressable sales) will land in 2020.