NRF: Online sales in 2017 will grow three times faster than the retail industry
February 8, 2017 12:33 PM
Online and nonstore sales are projected to nearly triple the year-over-year growth rate for the entire retail industry in 2017, according to the National Retail Federation, which released its annual retail sales forecast today.
The NRF predicts that nonstore sales will grow 8-12% in 2017, compared with a projected 3.7-4.2% growth rate for the retail industry as a whole (excluding automobiles, gas stations and restaurants). The NRF appears to be projecting only modest sales growth for bricks-and-mortar stores in 2017. While NRF did not break out that projection, an Internet Retailer analysis suggests a store sales growth rate of about 2.8% for 2017. Beyond these growth range projections, the NRF did not release projected sales figures for 2017. Online sales are part of nonstore sales, but that category also includes sales through mail-order catalogs, telephone sales and other direct-to-consumer channels that do not take place online or in stores.
In the fourth quarter of 2016, nonstore sales topped $145.49 billion, a 12.8% increase compared with the fourth quarter of 2015, according to data released in January by the U.S. Commerce Department.
Based on the Q4 jump in nonstore sales, e-commerce sales alone stand to grow about 16.0% during the same period—a growth rate not seen since 2013. The Commerce Department will report fourth quarter and full-year 2016 U.S. e-commerce sales on Feb. 17.
“It is clear that online sales will continue to expand in 2017 and provide growth for the retail industry,” NRF chief economist Jack Kleinhenz said. “But it is important to realize that virtually every major retailer sells online and many of those sales will be made by discount stores, department stores and other traditional retailers. Retailers sell to consumers however they want to buy, whether it’s in-store, online or mobile.”
“[The U.S. economy is] building slowly, not at the pace any of us would like to see, but trending in the right direction,” NRF president and CEO Matthew Shay said Wednesday morning during a conference call. “It’s our view that the economy is on firmer ground as we head into 2017 and that consumers are in a better place, businesses are in a better place.”
Well, not all businesses.
A number of high-profile retailers have filed for bankruptcy protection or gone out of business in recent months, including Limited Stores LLC, No. 216 in the Internet Retailer 2016 Top 500 Guide; American Apparel Inc. (No. 338); and Wet Seal (No. 510 in the Top 1000) among others.
Shay said retail is evolving at a faster pace than ever, and that is creating problems for some retailers and opportunities for others. “What we’re seeing is continued change and evolution to meet the needs of consumers,” he said. “The business model has to evolve quickly to meet the needs of consumers. It’s clear that many companies are working as quickly as possible to transform themselves, but not all of them are going to make that jump. It’s a highly competitive environment. When there’s that level of volatility, you’re going to see businesses that aren’t going to remain competitive and new businesses emerge.”
But before shoppers do start to spend more online and offline, Shay says they further assurances that economic improvements will continue and that the proverbial rug won’t be pulled out from under them.
“We think that consumers are changed,” he said. “They’re not the consumers that we saw previous to the last recession. They need to be shown that things truly are better and they need to have a high degree of confidence. We think that consumers will remain thoughtful, circumspect, even a bit hesitant to spend, until they really have more certainty about the strength of the economy.”