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The US retail industry is estimated to have brought in over $1.2 trillion in sales in Q1 2019, growing 2% year-over-year (YoY), according to a report from the US Department of Commerce.
Business Insider IntelligenceThis is a serious deceleration from the 3.8% YoY growth the industry saw in Q4 2018, with this being the fourth consecutive quarter of slowing sales growth and the lowest growth it’s posted in over three years. Meanwhile, e-commerce sales totaled $127.3 billion this past quarter and grew 12.4% YoY, an acceleration over the previous quarter’s 11.9% annual growth.
Here’s what it means: This is the first time total retail and e-commerce have seen their quarterly growth trend in different directions since late 2016, potentially setting them up for different results this year.
- The brick-and-mortar retail industry has been hit hard by retail’s slowing growth and closures, and it may only get worse. The industry’s flagging performance and the ongoing trade war between the US and China can seriously damage US retailers’ sales in 2019, and it’s possible both factors won’t improve anytime soon. And with over 7,000 stores already set to close in 2019 — and the potential for as many as 12,000 total closures by the end of the year — continued poor performance for retail could drastically chance the industry’s landscape.
- E-commerce sales growth picking up could signal that online sales can thrive despite retail’s woes. Prior to Q1 2019, US e-commerce sales growth decelerated for four straight quarters, but this past quarter’s improvement might mark the start of a longer rebound. E-commerce sales growth is generally around 10 percentage points higher than the total retail industry’s, but if it can accelerate even as the industry’s performance slides, e-commerce will become a true powerhouse within US retail.
The bigger picture: If this trend continues into future quarters, e-commerce may need to be all retailers’ main focus before long.
E-commerce made up 10.2% of US retail sales in Q1 2019, and if its growth accelerates while the retail industry’s slows, that share could skyrocket. The share gained a percentage point between Q1 2018 and Q1 2019, and if e-commerce sales take off while retail drops, that shift could pick up the pace.
Most, if not all, retailers take e-commerce seriously at this point, but if e-commerce accounts for a quarter of retail sales within the next decade, they’ll need to pour more resources into it to drive sales, especially if total retail continues to fade.
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See Also:
- Amazon leads in online grocery shoppers, but lags in spend
- Walmart’s e-commerce growth beats Wall Street’s expectations
- Google Shopping just got a major overhaul
Source: Business Insider – dkeyes@businessinsider.com (Daniel Keyes)