US retail sales tumbled in March ending a disappointing
first quarter for many retailers. According to the US Commerce department,
March retail sales declined 0.4% from February, the biggest decline in nine
months. This follows a 1.0% increase in February from January and a 0.1% decline
in January from December. Department stores, electronics retailers and sporting
goods outlets all reported lower sales.
Many retailers including Target, Family Dollar and
Nordstrom’s have issued profit warnings for first quarter citing cold weather
the main culprit in declining sales. However, other issues may be at play here
including higher taxes that kicked in at the beginning of the year,
debt-strapped consumers and increasing competition within the retail industry.
Combined, all of these issues can be reasons for the increase in ecommerce
sales as more and more consumers seek out price comparisons with much more ease
on mobile devices such as smartphones and tablets.
How has ecommerce sales fared? While data will not be
available until next month, perhaps one can gain insight from the US Commerce
department’s fourth quarter ecommerce report which was published in February.
According to the report, ecommerce sales increased 1.4% from third quarter and
15.6% from fourth quarter 2011. As a result, ecommerce sales as a percentage of
total retail sales were 5.4% for fourth quarter. In fact, ecommerce sales have
steadily increased its portion of retail sales from 4.9% of total retail sales
for first quarter 2012. This trend will likely continue as many retailers
continue to invest in multichannel activities.
Ecommerce logistics solutions are ramping up as well. To
remain competitive, retailers are utilizing stores as fulfillment options while
same day delivery services continue to expand despite some reports suggesting
consumers are not interested in such a service.
In February, Macy’s announced plans to expand online
fulfillment from 292 stores to 500 by end of 2013. Other retailers such as
Walmart are doing this as well. As more retailers connect their physical
presence with their online presence, the blurring of the two will occur with
the end goal of creating a seamless and thus successful buying experience for
the consumer.
Meanwhile, San Francisco seems to be a hotbed for same day
delivery activity. Google recently launched its same day delivery service to
compete against already existing services from Ebay, Amazon and Walmart. Also,
the successful British courier company, Shutl, opened its US headquarters in
San Francisco.
US total retail sales will likely remain sluggish
throughout 2013 as the economy continues to grow at a slow pace. However,
ecommerce will probably grab an increasing percentage of retail sales as
consumers look to compare prices, buy goods 24/7 and learn to demand same day
delivery services.
