The most significant retail trend fueled by COVID-19 has been the continued increase in e-commerce. This growth should continue even if the distribution of vaccines gives hope for a return to normal. In fact, 74% of global retail and consumer brand professionals said they expected the crisis-induced surge in online shopping to become permanent in an October survey by Euromonitor International. .
E-commerce has been the fastest growing channel over the past decade, with the crisis accelerating these changes. Euromonitor International predicts that half of the absolute growth of the global retail industry over the period 2020-2025 will be digital. This equates to $ 1.4 trillion in absolute growth as more products are sold online. To put this projected growth in e-commerce into context, that would roughly equate to the total value of products sold across all retail channels just five years ago.
China and the United States will account for 55% of this growth in value in e-commerce opportunities, which can be expected from the world’s largest e-commerce marketplaces. From a growth percentage perspective, Latin America, an emerging region of e-commerce, has seen its uptake accelerate due to the crisis as more and more consumers shop online to get hold of products from the market. first necessity.
E-commerce in Latin America has long lagged behind other regions due to its large unbanked population, weak postal systems, and consumer mistrust of the channel, as well as others. factors. COVID-19 has led companies to invest more in digital, including expanding the website experience, adding direct-to-consumer operations and partnering with delivery services. Many have turned to social media platforms like Instagram, Facebook, and WhatsApp to facilitate interactions. For example, Walmart
These efforts have helped Latin America shows the strongest growth of all regions with a 60% jump in products sold online in 2020. MercadoLibre has been one of the largest companies to benefit from the digital shift in Latin America. Euromonitor expects Latin America to continue growing over the forecast period, powered by Mexico, which narrows the gap between itself and the region’s largest e-commerce market, Brazil. . Traditionally, spending in the travel industry has boosted e-commerce in Mexico, but the desire to shop online for security reasons has led consumers to ignore some of the barriers like fraud and logistics that previously held back sales. in line.
Apparel and footwear is expected to generate the strongest growth in absolute terms over the period 2020-2025, according to Euromonitor, closely followed by food and beverages. The former has suffered the dramatic impact of the digital revolution over the past decade while the latter has made its mark in 2020, posting the highest growth rate of any category. Consumers confined to the home have turned to the digital channel out of necessity to shop during shutdowns, helping the industry overcome barriers that previously held it back.
Digital sales in the fashion industry are expected to continue on their growth trajectory after the pandemic, increasing both in percentage and in real terms, although more slowly than expected due to COVID-19. The clothing and footwear industry was particularly affected during the pandemic. The overall industry shrank by 19% in 2020, with the growth of the burgeoning e-commerce channel slowing to 3% in 2021, down 20% from the previous year, according to Euromonitor. While e-commerce will outpace the growth of other channels, its continued rise will be held back by the overall decline of the industry, which is not expected to reach pre-pandemic sales until 2024.
However, the digitally-inspired changes reshaping retail go beyond just changing channels. New business models have gained momentum and business ecosystems have emerged, forever changing the way retailers and brands reach and engage this digitally connected consumer base. Over the past decade, the digital revolution has given way to a more complex and fragmented business landscape. Marketplaces, direct-to-consumer brands, social commerce, direct selling and voice commerce are just a few examples of this diversification of avenues to reach the end consumer.
Retailers and mainstream brands are now competing on their digital capabilities. Many in the industry have accepted this reality. Of those who work at retailers and mainstream brands, 68% expect consumers to judge them more on their digital prowess after the pandemic, according to a survey conducted by Euromonitor International in November 2020. Be rated on their resume digital means that retailers and mainstream brands that weren’t investing in new technology or adopting a digitally-focused mindset before the crisis, have fallen even further behind their peers. Do nothing and they risk alienating their consumer base, which has likely become more digital-savvy during this time of rapid digital transformation.