FTI Consulting Projects U.S. Online Retail Sales to Climb to $1.2 Trillion in 2024
FTI Consulting's 2024 Online Retail Report projects U.S. online retail sales to reach $1.2 trillion in 2024, a 10% increase from 2023. E-commerce is expected to account for 22.7% of retail market share in 2024, up from 21.6% in 2023. The report predicts e-commerce market share will plateau near 35% by the mid-2030s, with several product categories already at this level.
Key trends highlighted include retailers optimizing stores for fulfillment, managing store fleets, blending digital and in-store experiences, and using AI for personalized shopping. The report also notes the potential impact of digitally native direct-to-consumer retailers on the market, particularly affecting deep value store-based retailers.
- Projected 10% increase in U.S. online retail sales to $1.2 trillion in 2024
- E-commerce market share expected to rise to 22.7% in 2024 from 21.6% in 2023
- E-commerce sales growth represented 57% of total retail sales growth in Q1 2024
- Sustained high- to mid-single-digit sales growth predicted for several years
- E-commerce market share growth expected to decelerate compared to pre-COVID period
- Mid-teen annual sales growth rates not expected to continue as seen in pre-COVID decade
- Potential disruption from newcomers in e-commerce market may impact existing retailers
The projected growth of U.S. online retail sales to
For retail investors, this highlights the importance of investing in companies with strong online infrastructures, especially those that are integrating omnichannel strategies. Traditional brick-and-mortar stores converting into fulfillment centers reveals an adaptive strategy to optimize returns and reduce overhead costs. This could lead to improved margins and potentially higher stock valuations for companies effectively managing this transition.
Moreover, the use of artificial intelligence to enhance personalized shopping experiences is a trend to watch, as it could drive increased consumer engagement and higher sales. Retailers who are early adopters of such technologies may enjoy competitive advantages.
The forecasted
From a financial perspective, investors should consider the implications of sustained single-digit growth rates in e-commerce. While this may be slower than the pre-pandemic era, it still positions the sector as a reliable growth area. Companies that can effectively blend digital and physical customer journeys are likely to benefit the most.
In terms of stock performance, businesses that are optimizing their store fleets by closing underperforming locations and reducing labor costs could see improved profit margins. This strategic realignment helps in bolstering long-term financial health. Additionally, the rise of digitally native direct-to-consumer retailers presents both opportunities and threats, as they could capture market share from traditional players.
The integration of artificial intelligence (AI) and other technological innovations in the retail sector as highlighted in the report is pivotal. AI-driven personalized shopping experiences are becoming a key differentiator, as they can significantly enhance customer engagement and retention.
Retailers investing in AI and related technologies to create customized promotions are likely to see better customer satisfaction and higher conversion rates. This could translate to stronger revenue growth and market positioning. Furthermore, the transformation of physical stores into fulfillment centers is a smart use of technology to optimize logistics and inventory management, improving operational efficiency.
For investors, the emphasis should be on companies that are not only embracing but also leading these tech-driven changes. Firms that lag in this area may struggle to keep pace with industry leaders, impacting their market share and profitability.
E-Commerce Resumes Market Share Gains Following a Post-COVID Lull, Impacting Brick-and-Mortar Stores
WASHINGTON, July 15, 2024 (GLOBE NEWSWIRE) -- FTI Consulting, Inc. (NYSE: FCN) projects that U.S. online retail sales will reach
The firm’s Retail & Consumer Products practice, which conducted analysis for the report, expects U.S. e-commerce sales to account for
“E-commerce in the U.S. is in a maturing phase as it returns to pre-pandemic normalcy, but it continues to capture market share, primarily from store-based retailers,” said J.D. Wichser, a Senior Managing Director and Leader of the Retail & Consumer Products practice at FTI Consulting. “As the retail landscape evolves, it is critical for businesses to turn their strategies toward omnichannel integration and technological innovation while adapting to shifting consumer demands to maintain a competitive edge in a crowded field.”
E-commerce sales growth represented
The report also highlights several trends to watch in the U.S. retail industry, which demonstrate an effort to adjust to market changes. U.S. retailers are shifting their stores to fulfillment centers to optimize returns and inventory, managing store fleets by closing under-performing stores and reducing labor, blending digital and in-store customer journeys, and using artificial intelligence to engage more closely with consumers.
“More retailers are creating personalized shopping experiences and promotions for consumers, which include the use of Generative-AI content,” said Kurt Staelens, a Senior Managing Director in the Retail & Consumer Products practice at FTI Consulting. “This type of customization has the ability to attract and retain customers and encourage them to immerse themselves with the products they want.”
Another trend featured in the report is the potential disruption from newcomers to the e-commerce market. Digitally native direct-to-consumer retailers, which have grown in popularity in the U.S. and globally, have the ability to increase overall U.S. retail sales, with many analysts expecting these platforms to take sales and market share primarily from deep value store-based retailers, having less of an impact on existing e-commerce channels.
Read the full FTI Consulting report here.
About FTI Consulting
FTI Consulting, Inc. is a global business advisory firm dedicated to helping organizations manage change, mitigate risk and resolve disputes: financial, legal, operational, political & regulatory, reputational and transactional. With more than 8,000 employees located in 33 countries and territories, FTI Consulting professionals work closely with clients to anticipate, illuminate and overcome complex business challenges and make the most of opportunities. The Company generated
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