The coronavirus will squash retail growth this year, with worldwide sales expected to drop 5.7% and U.S. sales declining at an even higher rate, 10.5%, according to the latest forecasts from eMarketer.
Before the pandemic prompted closures of retail stores around the globe, eMarketer had forecast that 2020 worldwide retail sales would reach $26.46 trillion, 12% higher than its revised estimate of $23.36 trillion.
“The magnitude of the downturn and pace of recovery will be harder on the retail market than the Great Recession,” according to an article on the eMarketer site. “After the 2008-2009 financial crisis, it took the majority of affected markets approximately one year for retail sales to return to pre-crisis levels. But for this crisis, we anticipate a longer recovery period of approximately two years.”
In February 2020, eMarketer projected that total U.S. retail sales would increase 2.8% for the year. While Q1 was in the black with a 2.5% sales increase year-over-year, sales plummeted 24% in Q2 2020. eMarketer is now predicting a hefty sales decline of 16.5% for Q3, with a more moderate 3% dip for the crucial Q4 holiday season in the U.S.
Although e-Commerce represents a smaller share of total retail sales than brick-and-mortar, online retailing is positioned to act as a counterweight to steep brick-and-mortar declines. Online retail is forecast to achieve 18% growth for the year and is expected to advance in every quarter. E-Commerce sales were up 19.1% in Q1, even before the pandemic’s impact was widely felt, according to eMarketer. While stay-at-home orders and non-essential retail store closures were in effect in Q2, e-Commerce sales expanded by 23%, and eMarketer forecasts growth of 17.2% and 14%, respectively, for Q3 and Q4.
Curbside pickup and other at-store fulfillment options have helped drive the surge in e-Commerce sales. “We now expect U.S. click-and-collect e-Commerce sales to grow to $58.52 billion, up 60.4% from our initial forecast of 38.6% growth,” eMarketer said.