The retail industry is undergoing a significant transformation, fueled by the rise of e-commerce. According to a report by Boston Consulting Group (BCG), e-commerce is projected to represent a substantial 41% of global retail sales by 2027. The report, titled “Winning Formulas for E-Commerce Growth,” is based on a comprehensive global survey conducted earlier this year, which included responses from 410 retail companies and 415 consumer packaged goods (CPG) companies with varying revenues.
The findings of the report paint a clear picture of the changing retail landscape, with e-commerce leading the way. While physical stores have shown signs of recovery following the impact of the pandemic, it is evident that online shopping’s convenience and accessibility continue to drive e-commerce growth. In 2017, e-commerce sales accounted for only 18% of global retail sales. However, this percentage has steadily increased over the years, and the report suggests that it will reach an impressive 41% by 2027.
The study also revealed variations in e-commerce growth rates across different regions. Europe experienced a modest 3% increase in e-commerce sales in 2022, while both the US and Asia observed a more significant 7% increase. Overall, global e-commerce sales are expected to achieve a compound annual growth rate (CAGR) of 9% until 2027. Although this growth rate falls short of the pre-pandemic trend of 12%-14%, it still outpaces the projected growth rate for physical stores, which is forecasted to be just 4%.
Martin Barthel, a partner and managing director at BCG and co-author of the study, emphasized the lasting transformation that e-commerce has undergone. He pointed out that the competition between emerging players and established incumbents has intensified, primarily driven by the purchasing patterns of Baby Boomers and Generation X, who have a significant influence on today’s e-commerce sales.
As e-commerce is predicted to dominate global retail sales in the coming years, retailers must adapt to this changing landscape to stay competitive. This entails investing in robust online platforms, optimizing the customer experience, and effectively targeting key consumer segments. By embracing e-commerce and adopting winning strategies, retailers can position themselves for success in the evolving world of retail.
Useful links:
1. BCG Report on E-Commerce
2. E-Marketer Article on E-Commerce Growth
