E-commerce retail sales posted the strongest quarterly growth since 2011 in the second quarter. Seasonally adjusted online retail sales surged with a $5,159 billion increase over the previous quarter, a 4.8% jump, pushing the year-over-year growth rate to 16.2%.
Bricks taking a pounding from the clicks
Second-quarter e-commerce retail sales were 16.0% of retail sales excluding auto dealers, gas stations, food and beverage stores, and restaurants. This share stood at 15.6% in the first quarter of this year and 4.3% in the first quarter of 2005. IHS Markit expects e-commerce retail sales’ share of retail sales excluding auto dealers, gas stations, food and beverage stores, and restaurants to climb to 16.4% in the third quarter.
The continued growth of online sales as a share of total retail is not surprising given Americans' growing propensity for quick, accessible, and cost-effective options on the web, and increasingly, via mobile devices. What is somewhat surprising, however, is the sprightly pace e-commerce has been able to maintain. Some retail segments such as groceries are still in their infancy stages as far as e-commerce is concerned, so there is conceivably upside potential in some of these areas. Brick-and-mortar retail is not going extinct, but certain segments are certainly more at risk than others. Department stores have been confronted with this reality head-on, and are likely to experience some ongoing difficulty as technology and consumer preferences evolve.
Chris G. Christopher, Jr. is the Executive Director of US Macro, Global Economics, and Consumer Markets for IHS Markit.
Posted 30 August 2017