Photo: Walmart
Consumers will continue to make more purchases online while cutting back on in-store purchases over the next decade, according to a report by FTI Consulting, which forecasts total online spending in the U.S. to surpass $1 trillion by 2027.
Online sales, which now account for roughly 12 percent of total retail sales, excluding auto and gas, will grow to 22 percent over the next 10 years, according to the estimates.
“The impact of accelerating online sales growth has been evident in the past two years, with elevated levels of retail bankruptcies and announced store closures amid a non-recessionary environment,” said Christa Hart, a senior managing director in FTI’s retail & consumer products practice, in a statement. “If online sales double by 2023, as we expect, stores will have to contend with the prospect of losing the same amount of sales to the online channel in the next six years as they did in the previous 16. The frustration for many retailers is that even building a complex and expensive omnichannel enterprise has just kept them in the game instead of leading to renewed profitability.”
The biggest beneficiary of the shift from stores to online will be Amazon.com, according to FTI. The e-tailer, which currently accounts for 34.2 percent of online sales, will see its share grow to more than 50 percent of the market by 2027, the firm estimates.
One area where Amazon may find a tougher go moving sales from stores to online is in grocery. FTI puts current market penetration for online at only two percent of grocery’s total and forecasts online growing to somewhere between mid- and high-single digits by 2027.
“U.S. consumers have still not embraced online grocery shopping and appear to prefer to shop for their food in-store,” said Khaled Haram, a senior managing director at FTI. “Tens of billions of dollars in sales migration to online are at stake in this category, so efforts and investment by Amazon, Walmart and others will attempt to break down these barriers to adoption in the next few years. It is increasingly clear that physical stores will play a role in that effort to get more shoppers buying their groceries online.”