FTI Consulting Projects U.S. Online Retail Sales to Climb to $1.2 Trillion in 2024

Rhea-AI Summary

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.

Positive

• 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

Negative

• 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

Insights

Market Research Analyst

The projected growth of U.S. online retail sales to $1.2 trillion in 2024, as analyzed by FTI Consulting, signals a significant shift in consumer buying behaviors. E-commerce's increasing market share to 22.7% underlines the importance of digital channels for retailers. This growth, although decelerating compared to pre-pandemic rates, suggests that consumer preference for online shopping is solidifying.

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.

Financial Analyst

The forecasted $1.2 trillion in U.S. online retail sales for 2024 represents an almost 10% increase, indicating a healthy growth trajectory for the sector. This growth, captured primarily from store-based retailers, aligns with the broader trend of digital transformation in retail.

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.

Tech Expert

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 $1.2 trillion in 2024, an increase of nearly 10% from last year, according to the firm’s 2024 Online Retail Report.

The firm’s Retail & Consumer Products practice, which conducted analysis for the report, expects U.S. e-commerce sales to account for 22.7% of retail market share in 2024, compared with 21.6% in 2023. Despite continued growth, e-commerce market share of total retail sales is expected to decelerate compared to the pre-COVID period and plateau near 35% by the middle of next decade. Several product categories have already reached that level, including toy and hobby, office supply, consumer electronics, books and magazines, music and videos, computer hardware and software, home furnishings, and sporting goods.

“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 46% of total retail sales growth in 2023, which is consistent with pre-COVID capture rates, and 57% in the first quarter of 2024, its highest rate since 2017, excluding the pandemic period. The report predicts that total U.S. e-commerce sales, will not see a mid-teen annual sales growth rate year-over-year, as they did consistently for more than a decade prior to COVID, but will sustain high- to mid-single-digit sales growth for several more years.

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 $3.49 billion in revenues during fiscal year 2023. In certain jurisdictions, FTI Consulting’s services are provided through distinct legal entities that are separately capitalized and independently managed. More information can be found at www.fticonsulting.com.   

FTI Consulting, Inc.  
555 12^th Street NW  
Washington, DC 20004  
+1.202.312.9100 

Investor Contact:  
Mollie Hawkes 
+1.617.747.1791 
mollie.hawkes@fticonsulting.com 

Media Contact:  
Samantha Ford
+1.617.480.7402
samantha.ford@fticonsulting.com

FAQ

What is FTI Consulting's projection for U.S. online retail sales in 2024?

FTI Consulting projects U.S. online retail sales to reach $1.2 trillion in 2024, an increase of nearly 10% from the previous year.

What percentage of retail market share is e-commerce expected to account for in 2024 according to FTI Consulting (FCN)?

According to FTI Consulting's report, e-commerce is expected to account for 22.7% of retail market share in 2024, up from 21.6% in 2023.

What trends in the U.S. retail industry does FTI Consulting's 2024 Online Retail Report highlight?

The report highlights trends such as retailers optimizing stores for fulfillment, managing store fleets, blending digital and in-store experiences, and using AI for personalized shopping experiences.

How might digitally native direct-to-consumer retailers impact the U.S. e-commerce market according to FTI Consulting's report?

The report suggests these retailers could increase overall U.S. retail sales and potentially take market share primarily from deep value store-based retailers, with less impact on existing e-commerce channels.