Illustration: Rebecca Zisser/Axios

Headlines Tuesday painted a picture of a booming U.S. retail market: Amazon's well-covered Prime Day(s) generated an estimated $5.8 billion of sales and the Commerce Department's retail sales report showed an especially strong reading for June.

Yes, but: A deeper dive into the data shows retail sales growth is slowing, with the all-important online component — the major source of growth, as brick-and-mortar sales struggle — cooling notably.

"While several negative developments in late 2018 ... could have contributed to consumers’ skittishness, no single event could explain why shoppers curtailed spending growth in the second half of the year and continue to do so."
— Christa Hart, a senior managing director at FTI Consulting

The big picture: More U.S. companies are doing business online than ever before, but online retail sales growth has been decelerating for 4 consecutive quarters, data from FTI Consulting's 2019 U.S. Online Retail Forecast shows.

  • FTI's 20-year data set suggests that "online sales growth may have hit an inflection point and may experience decelerating growth going forward."
  • Retail sales overall have pulled back from 5%–6% growth in early 2018 to the mid-3% range so far this year, "for no obvious reason."
  • Even Tuesday's strong U.S. retail sales report puts growth on pace for just 3.5% year-over-year, well below the pace of the previous 2 years and below the longer-term average.

What's happening: Online sales are taking a larger portion of overall retail, and slowing growth in that segment is reflecting slowing growth overall.

  • "The key finding relates to multiple periods of e-commerce growth decline, which does not align with what we have seen over the past decade," FTI's managing director of corporate finance and restructuring John Yozzo, tells Axios in an email.

Details: Online sales growth has slowed to an average of 13.3% in the most recent 4 quarters from 16.1% a year earlier. It has weakened further to the low-12% range in the 2 most recent quarters. FTI projects the growth rate will fall to 5.9% in 10 years.

  • "The degree to which this decrease in online growth manifests itself over the next year is yet to be known," Yozzo said, "but analysis suggests we may be experiencing an inflection point in e-commerce where the overall rate of growth remains in the low double digits."

Go deeper: Axios' Deep Dive on the future of retail

Editor's note: This story was corrected to show overall retail sales had been growing 5%–6% (not online retail sales).

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