Edge by Ascential has released its annual Future Retail Disruption Report for 2021-2022. The data shows that shoppers will continue to buy online post-pandemic, and to a greater extent than pre-Covid – with online sales now predicted to account for almost 40% of chain retail sales by 2026.
E-commerce growth accelerated during 2020 as the pandemic forced shop closures and consumers shifted to online buying. Edge Retail Insight, Edge by Ascential’s forecasting and retail research portal, showed the pace of growth of online shopping in 2020 was twice as fast in most major markets than had been previously forecast, rising 37.4% worldwide. In 2019, e-commerce globally grew by 18%.
In the UK in 2019, the e-commerce share of chain retail sales stood at about a fifth (21%). By the end of 2020, this had grown to 29% and in 2021 it is 32%.
Over the next five years, Edge Retail Insight anticipates that e-commerce will account for two-thirds of Britain’s chain retail sales growth (66%), and by 2026 online shopping will account for 38% of the country’s chain retail sales – almost equivalent to the 39% global figure.
Edge Retail Insight’s report shows the lasting impact of the Covid-19 crisis on retail. It shows the biggest drivers of consumer behaviour going into the new year, and how retailers and brands can plan and innovate for this new operational paradigm shift.
Xian Wang, VP of Edge Retail Insight, said: “Covid-19 accelerated many changes that were already taking place and in this report we have focused on recent developments in last-mile fulfilment, the growth of retailer media, and the transformation of retailers into digital ecosystem platforms powered by data and analytics. In addition, we review the state of physical store networks as the shift to online sales puts pressure on the high street. These are some of the biggest areas of change in the retail landscape as we look to 2022.
“Retailers are innovating and investing to offer a better fulfilment experience to their customers, and the last mile has become a key battleground to lock in shopper loyalty. UK retailers have been trialling speedy delivery initiatives (Tesco) and partnering with delivery intermediaries (Morrisons) to raise their game and compete with the likes of Amazon, which seems keen to become a serious rival in UK grocery in 2022.
“Globally, of the almost 2,500 retailers we cover at Edge Retail Insight, two-thirds (60%) now offer two-hour delivery (or faster), and almost 30% commit to deliver in 30 minutes, as ultra-rapid VC-funded startups push the envelope with regards to customer expectations.”
The report focuses on the drivers of change:
- Omnichannel fulfilment diversity
The past year has rapidly increased table stakes for last-mile fulfilment through both owned and partnered pickup and delivery. Same-day options are now the norm across advanced e-commerce markets, with rapid delivery players offering delivery in 30 minutes or less in many cities. - The rise of retailer media platforms
As traditional retailers look to offset the cost of last-mile fulfilment, many of the bigger names are morphing into sophisticated advertising players through ad-tech partnerships or developing their own capabilities to monetise web traffic. Edge by Ascential’s sister brand, WARC, forecasts that retailer media will grow three times faster than the all-media rate in 2021. - Declining store real estate
The dramatic shift online will accelerate physical store closures. Across channels, compound annual growth rate (CAGR) will either remain static or shrink over the next five years.
Wang concluded: “In 2022, the brands who can master digital retail platforms and the new operating environment will put themselves in the best situation and will be ahead of the game to succeed in the future of retail.”
NAM Implications:
- ‘online sales now predicted to account for almost 40% of chain retail sales by 2026’
- Are you in a position to secure and maintain your fair share of sales and investment?
- Why not see the report for ways of optimising:
- Omnichannel fulfilment diversity
- The rise of retailer media platforms
- Declining store real estate
