E-commerce will grow four times faster than offline sales in the next five years.
According to Kantar, e-commerce is expected to surpass the $1 trillion mark by 2021 and will account for 18.9% of global retail sales within five years.
The global retail market will grow by 4.8% to reach $6.7 trillion in 2020.
Kantar’s Retail IQ service, which analyzes and forecasts the performance of 1,500 of the world’s largest retailers, estimates that global online sales will grow by 15.7% in 2020 to reach $861 billion (and pass the $1 trillion mark in 2021).
They represent 13.4% of retail sales, compared to 12.1% in 2019 and only 6.8% in 2015.
In 2020, regionally, North America is expected to grow by 3.9% to $2.9 trillion, with online sales accounting for 14% of total sales, while Europe is expected to grow by 3.8% to $2.1 trillion, with 8% of online transactions.
The APAC region is expected to grow by 8.6% to $1.4 trillion, with 19% of sales online, the highest proportion in the world.
E-commerce will almost double in 5 years
Over the next five years, Kantar forecasts that the global retail market will grow by 5.0% per year, reaching $8.6 trillion by 2025.
Online sales will grow four times faster than offline sales by 2025.
Thus, offline sales are expected to grow by 3.5% per year to reach nearly $7 trillion, while online sales are expected to grow by 13% per year to reach $1.63 trillion, or 18.9% of retail by 2025.
A growth that will benefit the current leaders
In 2025, Kantar predicts that Walmart will retain its position as the world’s leading retailer and Amazon the second largest, although Amazon is narrowing the gap considerably.
China’s JD.com is expected to remain the fastest-growing retailer in the world, moving to third place worldwide by 2025.
Germany’s Aldi is expected to move from 9th to 6th place worldwide by 2025.
Kantar predicts that most major international retailers will significantly increase the percentage of sales generated by online business.
For Walmart, online sales will increase to account for 10% of total revenues. Kroger and Home Depot are two other retailers for which Kantar expects online revenues to account for more than 10% of total sales.
In the apparel sector, the global market is expected to grow by $64 billion in sales by 2025.
Five global retailers, Fast Retailing, (owner of Uniqlo), TJX, Inditex (owner of Zara), H&M and Old Navy, are expected to contribute almost half of this growth.
The seven trends that will change retail
To grow, retailers will need to remain relevant by continually looking for ways to redefine commerce and create seamless experiences across channels.
They will also need to build stronger relationships with consumers through the effective use of data-driven insights.
As consumers place greater importance on sustainability, brands will also need to demonstrate that they are authentically aligned with consumer values.
Kantar’s seven macro trends that will reshape the retail landscape in 2020-2025 :
Asia is a source of inspiration for retail giants
With data-driven business models that focus on mobile, Asia is inspiring retailers around the world to launch new online and offline initiatives, with more and more merging of the two channels.
Growth potential is not limited to China, with markets such as India and Indonesia offering new opportunities through the expansion of giants such as Alibaba, innovative new players such as Flipkart and express delivery retailers such as Grab.
Cross-border – A global market thanks to unified business practices
Cross-border trade is becoming an essential issue for market regulators, with the year 2020 bringing more unified practices, especially for e-commerce.
While Alibaba and Amazon bring simplification, cross-border trade will disrupt pricing policy, stock management and create grey areas in legislative frameworks.
Margins – The balance between growth and profitability requires a change in the retail business model.
Established retailers are under increasing pressure to adopt new financial models to have more resources and relevance, which requires a structural change in retail.
The margin remains a priority, but it must be achieved through innovation, differentiation and new partnerships.
Visibility – To stand out, new mindsets and new skills are needed.
The proliferation of points of contact, moments of creation and the changing retail economy make it more difficult for brands to ensure their visibility and present themselves in a consistent way where consumers expect to find them.
Stores will evolve to reflect buyers’ desire for simplicity and commitment.
Accessibility – Leverage being everywhere and turn it into a sales and marketing opportunity.
Retail seeks to inspire loyalty by creating solutions and building ecosystems in line with consumers’ new lifestyles.
As they evolve to create seamless online/offline connections for consumers, they enable them to make better buying decisions, increase speed and automate purchasing.
Meaningful – Resonating with consumer values in an authentic way
Retail is no longer just a business, but must also have a purpose.
Buyers, especially centennials, are pushing for a change in societal values and consider the purpose of a brand to be paramount.
This consumer demand and an investor demand influence the relationship with suppliers, communication with buyers and the execution of transactions.
Relevance – Adopting algorithms to connect to consumers
Algorithmic retailing will infuse activity to each channel, creating a constant connection with shoppers.
For brands, this is an excellent opportunity to leverage retailer platforms to activate new shopping moments, both physical and digital…