Retail sales in the January through March 2014 quarter totaled $1.15 trillion, a 2.4% increase over the same period the year prior. In that same time period, e-commerce sales were $71.2 billion, or 6.2% of the total retail market, their highest share ever, compared to a 6 percent share in the fourth quarter of 2013, and a 5.5% share in the first quarter of last year.
Online growth is expected to continue to outpace that of total retail. Global research and advisory firm Forrester Research expects online retail sales in the U.S. to accelerate, and to reach $294 billion in 2014, or approximately 9 percent of all sales in the U.S. The firm is forecasting a compound annual growth rate of 9.5% between 2013 and 2018 for U.S. e-commerce, yielding approximately $414 billion in online sales by 2018, when online sales will account for 11 percent of total U.S. retail sales.
The key drivers of growth in the online channel, according to Forrester, are the increased penetration of mobile devices, including tablets, and the accompanying spending shift to mobile from online that is being made possible by the development of shopping apps and increasing richness of product offered on the web versus in-store. U.S. sales through mobile devices (smartphone and tablet), also called m-commerce, is expected to top $293 billion by 2018, with tablet sales actually becoming larger than smartphone sales, due to their larger screens and greater ease of use.
U.S. consumers are buying more apparel online as well. According to e-Marketer, 2014 e-commerce apparel and accessories sales will be $52 billion, an increase of 16.2% over 2013. By 2018, the firm projects, online apparel sales will total $86 billion, making it an increasingly important part of the market.
Online apparel sales are expected to remain considerably smaller than physical retailing. Many apparel retailers are improving their ability to deliver a superior in-store experience to consumers through more exciting in-store environments, more frequent introductions of new and visually compelling merchandise, and engaging in-store events. Also, as retailers hone their skills in omni-channel marketing, the lines between brick-and-mortar and online sales will continue to blur.
Forrester’s Sucharita Mulpuru wrote in a recent blog, “Retail is a $3 trillion dollar market in the US and growing. While we expect $150B more to be spent online between now and 2018, we expect $300B more to be spent offline in that same time. Add to that the money up for grabs that dying retailers like Sears, Office Max, Radio Shack and others will leave on the table and the opportunity for physical retail is actually quite large. eCommerce continues to grow, but you’d be missing a big part of the picture by underestimating the growth and changes happening in the physical store landscape as well.”