As the year closes, all signs indicate that 2022 may have been a pivotal year for the retail industry. At the start of the year, the expectation was that customers, freed from the restrictions of the Covid-19 pandemic lockdowns, would return to their local retail stores, while eCommerce, after soaring in 2020 and 2021, would slow down.
As it turns out, the exact opposite happened.
Despite inflationary pressures, consumers remained resilient throughout the year. As the holiday spending season ended, spending remained on track to meet the National Retail Federation’s projections for a 6-8% increase over 2021 – which had set a record of $889.3 billion.
One constant throughout the year was the continued shift toward online spending that started during the early pandemic lockdowns in March 2020; they showed no signs of letting up. The rise of m-commerce and people shopping on their mobile phones only sent sales even higher. At the same time, sales were stronger for eCommerce than in brick-and-mortar stores over the Back Friday/Cyber Monday week.
What does it all mean for 2023? A report in Bloomberg predicts this trend will continue to accelerate in 2023 across the globe, with more consumers buying online and spending less time driving to nearby stores.
Consumers have found that eCommerce offers benefits they can’t get offline. Mobile shopping is easy and convenient, while online stores provide a much wider selection for consumers to pick from than neighborhood stores. Online prices were also surprisingly resistant to inflation and fast shipping sealed the deal for buyers. Can we expect the same in 2023?
First, let’s take a closer look at what happened in 2022.
Throughout 2022, consumer spending persisted despite inflation and rising interest rates. Consumers got a boost from a strong labor market and an employment rate that hovered at a historic low of 3.7%. Even more importantly, there was plenty of evidence of pent-up consumer demand following the lockdowns in 2020. And there just wasn’t that much to suggest consumers were maxed out on their spending.
There was ample evidence that consumers were still very comfortable with shopping from their laptops or smartphone.
From July to September 2022, U.S. retail eCommerce sales soared to nearly $266 billion, a 3% increase from the second quarter, and eCommerce sales outpaced quarterly sales records in 2020, when eCommerce profits really started to pick up.
This wasn’t a surprise. eCommerce has been growing at a remarkable pace for years now, and its popularity exploded during the lockdowns in 2020 as shoppers found a safe alternative to venturing into physical stores.
The pandemic quickly became the catalyst that shifted shopper behavior, particularly for retailers. In that year, shoppers spent 32% more time with retailers online than in their stores, the largest growth in eCommerce in two decades.
Now that shoppers see eCommerce as a viable option, they’re also less willing to take long drives to stores, fight for parking spaces, wander from aisle to aisle looking for what they want, and brave long lines at the cash register when they can do the same thing in minutes on their smartphone, where they simply “point, click, buy.”
While visiting your local retail stores is always going to be far more of a social experience for shoppers, that may not be enough to break them from their online shopping habits today.
In 2022, the sales numbers confirmed that.
One of the biggest months of the year was November, when Black Friday and Cyber Monday enticed shoppers with deals. Sure enough, November’s sales were up 5.6% from November 2021.
November marked the official start of the holiday shopping season, and nearly 200 million Americans shopped during the Thanksgiving weekend covering Black Friday and Cyber Monday. The average sales discount for Black Friday deals was 30%, up from the average discount rate of 29% in 2021.
In fact, for all of 2022, retail sales were up 6.5% since November 2021 after solid gains during the first half of 2022, peaking at an 8.3% year-over-year rise in October. With consumers still spending from their pandemic-era stimulus checks, spending was robust for most of the year. Not even the Federal Reserve raising interest rates to slow inflation curbed it.
For eCommerce, Black Friday was truly an early Christmas gift, with sales reaching a record $9.12 billion. There were some surprises this year that bodes well for eCommerce in 2023.
A lot of eCommerce companies today are launching their shops on the Shopify platform, and the site was a big winner on Black Friday. The company reported that its merchants recorded their best-ever sales of $3.36 globally, a 17% increase over Black Friday sales in 2021.
A lot of eCommerce shops add their listings to Walmart’s online platform. On Black Friday, fewer people went to Walmart’s physical stores this year compared to 2021, a 5.3% dip. But Walmart did quite well with its online sales, and in fact, Walmart got more search traffic than its rivals among people looking online for Black Friday deals. Walmart made a major push for its digital Black Friday sales by offering three online-only days of deals ahead of Thanksgiving.
Overall, consumers were the big winners, taking advantage of major deals such as Amazon slashing prices on kitchen and home products by up to 84%. But eCommerce was also a winner, and analysts see the trends this year accelerating in 2023: more eCommerce shopping, less time in retail stores.
Overall, eCommerce sales were 35% higher in November than in the same month in 2019, before the pandemic started.
There were also predictions that 158 million people would shop on the last Saturday before Christmas, about 10 million more than last year’s projections, while an NRF survey indicated that 70% of holiday shoppers were planning to keep buying after Dec. 25.
All signs point to an encouraging year for eCommerce in 2023, while for traditional retailers, the need to establish their own online sales channels is becoming more apparent than ever before.
If you’ve been planning to start your own business in 2023, buying a thriving eCommerce site with brand recognition, an established customer base and options for scaling quickly is a shrewd move. It’s a much smarter investment compared to starting your own website from scratch, and clearly opening a retail shop is a risky proposition considering the higher comfort level consumers have today with online shopping.
Buying a thriving eCommerce company is likely to become an investment that pays off handsomely in the future, and your journey can begin at Website Closers.
We have a database of some very impressive eCommerce shops, in a wide range of industries and representing a wide price range as well. If you have a particular kind of company in mind that you’d like to buy, contact the experienced and professional brokers at Website Closers and we can make your search not only easier, but also far more effective than if you hunted for one on your own. Contact us today, we are waiting to hear from you.