Report: Retail slowdown ahead
Expect retail's recent boom to ebb after June.
What's new: FTI Consulting writes in a report, out this morning, that for many retailers, the second quarter "might represent the last hurrah in a one-year period of above-average consumer spending on goods, largely subsidized by Uncle Sam."
Why it matters: As the economy reopens, there are more experiences and services to spend money on, and the discretionary cushions are disappearing. Retail sales already dipped slightly in May.
The big picture: E-commerce encroached further into brick-and-mortar market share during the pandemic, as those who had rarely shopped online were forced to do so.
- The market share of online retail sales grew to 19.8% in the first quarter of this year, up from 19% in 2020 and 15.4% in 2019.
The online share will rise further.
- FTI projects that online retail sales will grow 13.5% this year compared to 2020, reaching $865 billion.
- That would represent a 20.5% market share of retail sales in the U.S. (excluding cars and gas), the firm forecasts.
The Amazon effect: About 62% of the respondents to FTI's survey said they did most of their shopping online at Amazon.
- However, more than 60% said they shopped direct-to-consumer channels more often last year, including 36% who said significantly more.
- Worryingly for Main Street, almost no one said they avoided Amazon in order to support smaller or local businesses.
What to watch: Whether the pandemic-induced demand for online shopping has changed behavior for good.
- Less than 20% of those surveyed said they really missed in-store shopping.
- "Consumers have embraced online shopping to a new extent. We do not foresee a drastic shift or reversal in these behaviors as the economy fully reopens," J.D. Wichser, leader of FTI's retail & consumer products practice, said in a statement.