By the 2030s, online is expected to reach 40% or more of the overall apparel and footwear market. If that number sounds inflated, it’s because the percent of online sales frequently reported today is incorrect.
That’s the conclusion of a recent Fung Global Retail & Tech findings. The report says the common belief that online sales only account for 10% of U.S. retail sales is wrong. In fact, the report says, the implication that 90% of sales are still generated through brick-and-mortar stores is perpetuated by retailers who have vested interest in justifying their physical stores.
The 10% number came about based on calculations that include grocery sales, which is a category that lags far behind others in terms of online adoption. “In the US, in particular, online retailing is predominantly about nonfood categories, and if we look at only those categories, e-commerce’s share of sales becomes more significant,” the report says.
The adjusted estimates that focus just on nonfood sales show e-commerce made up 14.6 percent of U.S. sales in 2016, compared to 10.8 percent of all retail sales including food.
In the UK, where online sales are about five years ahead of the U.S., nonfood e-commerce sales were 18.7 percent of the market last year, compared to 14.7 percent of sales including food. But even these numbers don’t tell the full tale since they eliminate food but not grocery related products like pet food and personal care. Removing all food retailers from the equation, as the UK’s Office for National Statistics does, shows e-commerce made up 22.5 percent of nonfood retailing in the UK in 2016. So far this year, the average has been 26.1 percent.
Further, e-commerce already commands 24% of the apparel and footwear market, according to Kantar Worldpanel. In 2018, the number is expected to reach 25%. In the U.S., e-commerce is expected to account for one fifth of fashion-related sales.
“In apparel and footwear, e-commerce’s share of sales tends to roughly track the average for all nonfood categories,” the report notes. “This is partially due to apparel being at the midpoint on the ‘tangibility scale’: apparel is not as sensitive to consumer demand to touch and feel the product as fresh food is, nor is it bought based on specification as often as electronics are.”