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Online sales to double share of total retail to account for a fifth by 2025: study

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The latest data from the The Economist Intelligence Unit (EIU) predicts that online sales will almost double their share of total retail sales from 10% in 2019 to nearly 20% 2025.

The EIU estimates that global online retail sales expanded by 32% in 2020 to US$2.6tn, even while the overall retail market contracted by over 2%.

While the pace of growth in online retailing will slow from 2021, the sub-sector will continue to expand its share of total retail sales—rising from about 10% in 2019 to nearly 20% by 2025.

The US will remain a crucial market, however much of the growth will come from emerging markets in Asia, Latin America and the Middle East, the study finds.

In 2021 global consumer spending declined by 4% yet expenditure on food and beverages still rose by 5%. Online grocery has been the biggest beneficiary, expanding from a small pre-Covid percentage to account for the lion’s share of online sales in most markets. We expect online grocery to retain its momentum over other categories of goods until at least 2023, when non-food retailing will start to accelerate again. 

According to the EIU, as a result online retailers will need to devise winning strategies in three key areas: adoption of next-generation technologies; warehousing and fulfilment; and harnessing a new generation of digital sellers.

Barsali Bhattacharyya, Manager of Industry Briefing at The Economist Intelligence Unit comments: “In a fiercely competitive sector, there will be both winners and losers from the market transformation, depending on retailers’ ability to shift online and retain customers. While companies race to capitalise on the opportunities thrown up by the shift online, many will struggle to be profitable. Besides using the latest technologies to keep a finger on the consumer’s pulse, companies will need to explore which markets offer most potential, all the while navigating increased regulatory barriers, as well as cyber-security and labour risks.”

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