Really? Physical Retail Grew More Than E-Tail?!

I just returned from our annual leadership conference, and one of my favorite presentations was made by our Vice President of Business Development, Mike Christensen. He described how, in 2021, retail grew by 17.9% or to $6.6 trillion dollars. However, the big surprise is this: Sales from physical stores (also known as “brick and mortar” stores), grew by 18.5% year over year, while—shockingly—e-commerce sales grew by only 14.2.%.  

Now, you might be thinking, “Duh! COVID made the difference, man!” To some extent, this thinking is valid. There absolutely has been a shift from 2020’s COVID craziness, but there’s more to the story. Let’s examine this more closely.  

Estimated Quarterly U.S. Retail Sales (Not Adjusted): Brick & Mortar and E-Commerce Sales
Source: US Dept. of Commerce, Economic Indicators Division, Retail Indicator Branch 

As e-tail grew by 31.8% from 2019 to 2020, we were all inundated with forecasts about the wild trajectory of e-tail and how this trend would change the game forever. Reliable industry experts predicted that consumer purchasing habits would be transformed and that we’d see years of e-tail evolution that wouldn’t reverse, even after the pandemic waned and beyond.

Retail sales growth from 2019 to 2021 was 21.9%. Yet, even if the e-tail evolution keeps expanding exponentially, the underlying fundamental truism today’s retail data reveals about consumer behavior is that people will still want to shop in person. Pent-up demand (and let’s face it, pent-up people, literally) was alive and well as we entered 2021.   

As Stores Re-Opened…

Stores had not yet fully recovered from shutdowns in 2021, but certainly more stores opened their doors last year than in 2020, and sales improved throughout the year. The course correction for physical retail was real and proved something many analysts had missed. In comparing e-commerce growth statistics and extrapolating them to forecast the eventual demise of brick-and-mortar sales, analysts were ignoring the reality that operations, functions, and trends tend to hit their maximum level of value and then plateau. 

Perhaps some of these same analysts were among those who, in 1994, told us that, when Zip drive portable magnetic disk storage systems were introduced, they would grow to replace all media in a decade. Nope! That didn’t happen. And what about the Palm Pilot in 1996? Everyone I knew had one on their hip. And remember the Nintendo Wii in 2006, when everyone you knew was bowling virtually? The fact is that if products hit the market at the right time, demand explodes. Eventually, though, they hit a ceiling and slow down, or gradually disappear. So, the question is, will we ever stop shopping in person? We can probably all agree that no one knows for sure, but what 2021 taught us is that it isn’t going to happen anytime soon. 

… Insights Came to Light

So, what does all this mean, and what should retailers do about it? Well, that depends on several factors, such as your target audience, your revenue growth strategy, your value proposition, and more. As you plan for the future, however, you can be assured that both physical retail and e-tail have shown sales increases, and both, when operating synergistically and seamlessly, are ideal ways to connect to consumers. A balanced plan that includes both will be the best approach. 

At MarketSource, we have expert teams in place, consisting of thousands of trained representatives and salespeople, who are working on the front lines of the retail industry. We are successful at building solutions that are tailored to meet the rapidly evolving needs of our customers, from providing strategic direction for retail brands and organizations to putting people in place to increase sales volume. In that vein, we’ve advanced a winning approach to enhancing customer connections to brands with our innovative new digital customer engagement solution, AskMe. 

With AskMe, a consumer in a retail store or on a website can immediately talk to a product professional to get answers to their questions and assist them in making a satisfying purchase decision. This solution is not to be confused with telemarketing call centers, which generally prioritize dry, scripted conversations and focus on volume of touches. AskMe provides virtual engagement in real time with an expert, extending what MarketSource has been doing face-to-face for nearly 40 years. AskMe is the newest development in our repertoire of innovations that are designed to support sales acceleration for brands and retailers. 

It’s all about balance. I said that already, right? 

Ready to talk?

AskMe® by MarketSource delivers an enhanced, simplified sale and accelerates your growth.  

Author: Steve Wilson

Author: Steve Wilson

Steve is VP of Retail Strategy & Operations at MarketSource. He has been helping steer the strategic direction of MarketSource’s retail business unit since 2010, with oversight including operations, new services and capabilities, and reporting and analytics. Steve has over 25 years of experience designing, implementing, directing, and operating retail programs focused on driving customer experience and sales.

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