In retail, brick-and-mortar’s steadily rising drumbeat of foot traffic is eCommerce’s pain, at least for now.
After all, sales in one channel cannot simultaneously occur in another channel, and we contend that the specter of at least some top-line cannibalization may confront retailers, where overall growth rates, boosted by the pandemic (naturally) begin to slow.
A slew of recent earnings reports from retailers, focused both on general commerce and on niche segments, show that in many cases, online sales are still growing, though at a tepid pace from lofty year-ago levels (when the pandemic was in its darkest days) and in some cases digital sales have outright declined.
Now, it should be noted that much of the data — reflecting the quarter that ended during the fall — is backward looking. Much might change as we head more firmly into the holiday shopping season, into colder weather months. If COVID cases spike during the next few months it seems likely that the increased foot traffic being spotlighted in the retail reports would decline, tipping the balance back toward online sales.
Indeed, across the global stage, eCommerce sales are slated to grow by as much as 23% between Thanksgiving and into Cyber Monday, year over year.
Read here: 23% Global eCommerce Spike Coming Between Thanksgiving and Cyber Monday
Out and About, in the Aisles
But for now, the novelty of being able to be out and about, in public, and able to touch and see merchandise in person, no doubt has led to the shift back to brick-and-mortar locations.
In two notable examples of the impact to eCommerce, the Best Buy said that during the quarter that ended in October, domestic comparable online sales were down a bit more than 10% as measured against last year (where in that quarter, online sales surged more than 173% year on year).
Domestic comparable online sales, overall, were up 2%, itself a slowing growth rate from the nearly 23% seen last year. Separately, Dick’s Sporting Goods said eCommerce sales gained a muted 1% in the latest quarter, as compared to last year (though up 97% from 2019 levels, which indicates just how firmly entrenched the great digital shift has become).
On Tuesday (Nov. 23), Wall Street was quick to shy away from these two names, sending Dick’s and Best Buy down double-digit percentage points.
The blunting of eCommerce has hardly been confined to the aforementioned firms. As has been reported in this space previously, general-category giants like Walmart and Target have seen marked slowdowns in their own eCommerce operations (and where Walmart’s own showing on this metric was an 8% gain in the U.S. — growth is growth but down from previous earnings reports that showed double-digit gains). Target and Walmart, of course, differ from Dick’s and Best Buy in that they also offer groceries and other items that find continued success in curbside (which would be counted in online).
The headwinds seen in eCommerce are being “made up” by in store traffic. After all, these companies are reporting overall sales growth even in instances where online sales are dwindling or at least slowing. Walmart’s 9.2% same-store sales gains in the U.S. outpaced the online growth slowdown; Best Buy is targeting double-digit sales gains for the remainder of the year.
Though the puts and takes are tough to discern in some instances — we don’t know exactlyhow things are shifting — there’s a starkly illuminating tell that in-store sales are gathering momentum at the expense of electronic conduits. That “tell” can be found with Amazon’s own slowing momentum, where third-quarter revenue growth slid to 15% from last year, but down from the 28% revenue growth seen in the second quarter (year over year).
The question becomes whether the pivot — assuming the pandemic really does move fully into the rearview mirror — toward in-store commerce hits online so much that the latter channel shows significant declines.
A wholesale decline seems unlikely, given the fact that PYMNTS surveys show that several segments, such as bridge millennials, intend to continue shopping online even after the pandemic ends, across food, retail and groceries.
Read also: Here’s Why Millennials Own More Connected Devices Than Anyone
Still, it bears monitoring whether for online’s hypergrowth the canary in the proverbial coal mine, though not singing, is fluttering its wings.
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