Nonstore sales rose at more than twice the rate of in-store sales in September, according to U.S. Department of Commerce data released this week. That’s in line with year-to-date data and bodes well for online retailers’ prospects during the upcoming holiday season.
September nonstore sales — which are mostly online but also include sales through call centers, catalogs, vending machines and door to door — increased by 6.2% versus 2.8% for all other retail sales. For the third quarter, nonstore sales rose by 8.2% versus 3.0% for other retail sales, and comparable figures for the first nine months of the year were 7.9% and 4.2%, respectively.
That’s based on a Digital Commerce 360 analysis of Commerce Department data that excludes sales of motor vehicles, vehicle parts and gasoline. The Commerce Department data is not adjusted for inflation. In September, consumers prices were 3.7% higher than they were 12 months earlier, according to the Commerce Department.
September online retail sales increase
Nonstore sales, which are reported monthly along with total retail sales, have been a good predictor of online sales in 2023. For the first six months of 2023, nonstore sales increased 7.7% and online retail sales, which the Commerce Department reports quarterly, grew by almost exactly the same percentage. The Commerce Department will report online retail sales for the third quarter Nov. 17.
The faster growth in nonstore versus in-store sales suggests that consumers continue to steadily shift their purchasing to the web from brick-and-mortar stores. And market research firm Insider Intelligence projects that will remain the case during the 2023 holiday season.
Monthly online retail sales projection
In a report released this week, Insider Intelligence predicts retail ecommerce sales will increase by 11.3% in November and December of this year, the heart of the holiday season, versus 3.0% for in-store sales. Total retail spending will grow 4.5% during the holiday period this year, up from 3.9% last year, Insider Intelligence says.
But some observers believe troubling news at home and abroad will lead consumers to spend more cautiously this holiday season.
“CEO and consumer confidence is declining in real time, and the macro global chaos is not going to help,” says Eric Roth, managing director, consumer at private equity firm MidOcean Partners who has followed ecommerce firms for years. “Holiday feels like it will be muted and perhaps a decline from 2022.”
While overall retail sales may be impacted by developments like the war in the Middle East, the trend has been for holiday shopping to shift to the web. Online retail sales have steadily grown faster than in-store sales during the holidays every year in the past decade, with the exception of 2021. In that case, the year-over-year comparison was with 2020, when the COVID-19 pandemic kept many shoppers out of stores and resulted in a 39.0% spike in ecommerce sales during the holidays, according to Insider Intelligence. Stores sales bounced back in late 2021 once many consumers had been vaccinated.
But in general, the pandemic accelerated the shift to online shopping. In 2022, online retail captured 20.9% of total U.S. retail sales, versus 15.4% in 2019, the last year before the COVID-19 pandemic struck the U.S., according to Digital Commerce 360. That estimate excluded goods rarely purchased online, including motor vehicles, gasoline, fuel oil and spending at restaurants and bars.
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