Is E-Commerce Really Crushing Brick-And-Mortar Sales?

Nov. 21, 2017 5:11 AM ETXLY, XRT, VCR, RTH, RETL, FDIS, FXD, RCD, PMR, ISHP, CNDF, EMTY, JHMC2 Comments
Wolf Richter profile picture
Wolf Richter
4.16K Followers

Some big sectors are still resisting.

There is one sector in retail that is seriously booming: E-commerce sales in the third quarter jumped 15.5% from a year ago, to $115 billion seasonally adjusted, a new record, according to the Commerce Department this morning. This includes online sales by brick-and-mortar retailers. Over the same period, total retail sales increased 4.3%. And retail sales without e-commerce - an approximation for brick-and-mortar sales - ticked up only 3.1%, barely staying ahead of 2% inflation and 0.8% population growth.

The chart below shows the e-commerce sales boom on a quarterly basis (seasonally adjusted). Note the beating during the Great Recession. Not even e-commerce is recession proof. It was sharp. People just stopped clicking on the "buy" button. But it was short. By Q3 2009, e-commerce was setting records again:

But how much of a danger is e-commerce to brick-and-mortar retail? Many observers keep pointing out that e-commerce accounts for only a tiny part of total retail sales. And that's true. While growing rapidly, the numbers are still relatively small. In the third quarter, the e-commerce share of total retail was still just 9.1%, but that's up from 8.2% a year ago.

The chart below shows brick-and-mortar retail sales (defined as total retail minus e-commerce) and e-commerce sales. Note the long beating that brick-and-mortar retail took during the Great Recession, starting in Q2 2008, from which it didn't recover until Q2 2011:

So is the "crushing" effect of e-commerce on brick-and-mortar overblown?

Not quite. There are several large brick-and-mortar sectors that are still considered "online-proof" or "e-commerce resistant." They're able to resist the encroachment of e-commerce because of the physical nature of their merchandise, state franchise laws that protect dealers, ingrained consumer preferences, and other factors. They are:

  • New- and used-vehicle dealers and auto-parts retailers: 21% of total

This article was written by

Wolf Richter profile picture
4.16K Followers
Wolf Richter is the publisher of wolfstreet.com, a site focused on business, finance, and money. The site is free. In addition to the many years at wolfstreet.com and its predecessor site, he has 20 years of C-level operations and finance experience.

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