As e-commerce sales continue to grow, a question arises of whether e-commerce will eventually overtake or completely replace physical store sales. Though the unpredictable nature of tech advancements and consumer behavior make long-term projections difficult, we outline several key trends below that we believe will mark both medium- and long-term e-commerce growth.
Forecast e-commerce sales
Figure 1: Forecast E-commerce Sales and Share of Total Retail
Source: eMarketer, 2018.
E-commerce’s share of total retail sales is expected to rise from 8.9% in 2017 to just over 15% in 2022, totaling nearly $892 billion.
Figure 2: Digital-impacted Retail Sales
Source: Forrester Research 2018.
However, digital-impacted retail sales, which include purchases made online and purchases made in-store by consumers who used a digital channel to research or browse, are expected to rise even higher. Digital-impacted sales are forecast to total more than $2.4 trillion and account for more than 58% of total retail sales by 2022 (Figure 2).
Looking beyond: Is there a ceiling?
It is difficult to predict where e-commerce’s share of total retail sales will peak; some forecast it at approximately 25%, while others expect it will be even more. The answer will depend heavily on several factors, including technology advancements, retailers’ ability to keep up with rising e-commerce fulfillment, and consumers’ preferences—all of which are hard to predict. However, there is significant reason to believe that a ceiling, if it does exist, will vary significantly by digital channel, geography and category.
Mobile will be a key driver of digital growth
M-commerce—retail purchases made on mobile phones—has been the fastest-growing shopping channel of the past five years (up by 522% between 2012 and 2017). M-commerce is forecast to grow by nearly 50% annually between 2018 and 2022, as consumers grow more attached to their phones and retailers invest in mobile platforms.
Variations by retail category
E-commerce growth has varied greatly by retail category and by retail price point. Across categories, soft goods like apparel and digitally driven goods like electronics have shown higher e-commerce growth than other categories like health and beauty, which consumers still prefer to purchase in-store. Price point is also an important determinant of e-commerce penetration, with luxury, off-price, discount and value retailers showing greater resistance to online growth than mid-priced brands. Though newer technologies, such as virtual reality and facial recognition, may make online purchases easier across all categories, the ceiling for e-commerce growth is likely to vary greatly by category.
Though reliable data on e-commerce share by U.S. regional markets is very limited, e-commerce buying patterns are expected to vary among urban, suburban and rural consumers. These variations reflect different levels of access to physical store networks, lifestyles and distribution costs for retailers. Online grocery growth, for example, is likely to reach higher levels in urban centers than in suburban and rural areas, given downtown consumers’ limited access to large supermarkets. At the same time, other categories will see lower e-commerce growth in the cities than in the suburbs, since urban consumers have easy access to dense physical store networks.
CBRE in Your Inbox
Receive CBRE Omnichannel research reports, market updates and more.