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Online sales growth surged in 2020 but is leveling off in 2021

March 18, 2021

In 2020, retailers and their customers embraced omnichannel sales like never before, helping drive annual e-commerce spending by 32.4 percent year over year to $791.7 billion. But the outsize growth already may be returning to a more measured pace, according to ICSC’s new Industry Insights report on fourth-quarter and holiday season e-commerce.

Annual e-commerce sales represented only 11 percent of total retail sales in 2019 and grew to 14 percent in 2020. That’s thanks in part to COVID-19 government mandates that required many retailers to close or limit capacity. Before the pandemic, food-and-beverage stores had the smallest digital footprint of any retail sector. In 2020, its e-commerce sales surged 147.1 percent. E-commerce also surged in sectors like building materials and garden supply, up 61.7 percent; health and personal care, up 67.6 percent; and sporting goods, hobby, books and music, up 60.7 percent, as consumers sought safer ways to shop and spent more time at home.

Though e-commerce sales grew by 32.1 percent year over year in the fourth quarter of 2020, that was down from the peak growth rate of 44.4 percent, reached in the second quarter of 2020. As the government distributes vaccines and lifts operating restrictions, this growth is likely to level off, the report says.

“The consumer’s desire to return to a sense of normalcy may lead to very different e-commerce trends in 2021”

That doesn’t mean e-commerce sales growth will shrink, however, as consumers still plan to take advantage of online channels. “While e-commerce growth has certainly accelerated, the coming year will likely provide insight into a new e-commerce and physical store equilibrium,” the report says. “The retail real estate industry and the world have undergone significant change, and the consumer’s desire to return to a sense of normalcy may lead to very different e-commerce trends in 2021.”

Read the full report here.

By Brannon Boswell

Executive Editor, Commerce + Communities Today

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