Retail

eCommerce Takes Half Of Pandemic-Driven Retail Growth

eCommerce

The dramatic consumer shift to Digital 3.0 — predicted months ago by the PYMNTS COVID-19 tracker work — is accounting for almost half of the retail growth in the US.

That’s the key finding from a new report from Deloitte, whose data is actually lacking the May sales spike of 17 percent. It found that eCommerce growth as of May 1 was up 68 percent, surpassing 40 percent of total retail sales. And eCommerce was far and away the category that showed the largest percentage of that growth at 47 percent of the total. For perspective, the next largest growth category was convenience stores at 11 percent. Grocery took 11 percent of the pandemic-driven sales growth and drug stores accounted for 5 percent.

For consumer attitude and preference, the report found that convenience continues to rule current shopping behaviors as more than half of consumers said they were willing to spend more to get what they need. According to the report, more than 50 percent of consumers said “convenience” was defined by contactless shopping, on-demand fulfillment and inventory availability. This attitude has driven a surge in mobile payment usage, delivery app downloads and buy online, pickup in store (BOPIS) adoption. Some consumers said the acceleration of convenience and the change in definition is driven by a lack of suitable options, while others they perceive them to be safer and healthier.

“As of 2019, stores still accounted for a staggering 85% of retail sales,” the report says. “Not only that, in certain categories, the numbers of physical stores have even grown in recent years. In fact, COVID-19 further demonstrated the importance of the physical store, with many brands and retailers experiencing significant revenue loss from the temporary closure of stores. The dramatic shift to e-commerce has also hastened the redefined role of the physical store, and many retailers have reimagined their stores to serve as order fulfilment centers to meet digital demand and drive last-mile execution. But, it is not yet clear whether this acceleration will be sustained by consumers maintaining digital shopping behaviors or the sector will see a normalization to pre-COVID trends as restrictions are lifted and stores reopen.”

The U.S. is not the only country seeing the shift. Overall Chinese retail sales of consumer goods dropped 2.8 percent in May from a year before, but online sales rose 22 percent, according to data released June 15.

For the year as a whole, eMarketer projects that Chinese online retail sales will rise 16 percent to $2.09 trillion while total retail revenues contract 4 percent to $5.07 trillion. “This would put China's overall retail market on course to be the world’s largest this year, eMarketer forecasts, as retailers in the U.S., the current leading market, have been much harder hit by COVID-19 — and to overtake traditional Chinese retail in volume by 2022,” says Nikkei Asian Review.

In China the pandemic appears to have created pent-up spending. “Wealthy people unable to go on holiday abroad because of the coronavirus are increasingly putting that money toward shopping,” a Chinese eCommerce industry insider says.

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NEW PYMNTS STUDY: ACCELERATING THE REAL-TIME PAYMENTS DEMAND CURVE – NOVEMBER 2020

About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.

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