With Black Friday on the horizon it is as good a time as any to explore retail trends – and the Boston Consulting Group has just released new research exploring e-commerce trends from the beginning of the pandemic to the present.
After tremendous acceleration throughout the pandemic, many retail and consumer packaged goods (CPG) companies faced a marked slowdown of online sales growth in 2022. And while consumers are returning to brick-and-mortar shops, e-commerce is still forecast to constitute 41% of global retail sales by 2027, a significant increase from its share of just 18% in 2017.
Africa is forecast to surpass half a billion e-commerce users by 2025 with a compound annual growth rate (CAGR) of 17% of online consumers, while revenue is predicted to increase by $23-billion between 2023 and 2027 to reach $59-billion in 2027.
Titled “Winning Formulas for E-Commerce Growth”, the study was conducted in the second quarter of 2023, and included respondents from 410 retail and 415 CPG companies around the world with revenues ranging from $50-million to more than $10-billion.
“While e-commerce is gradually reverting to its pre-Covid trajectory, the landscape has undergone a notable and lasting transformation,” says Martin Barthel, a partner and managing director at BCG and a co-author of the study. “The rivalry between emerging entrants and established incumbents has heightened driven by the purchasing patterns of Baby Boomers and Gen-X who, collectively, wield substantial influence over today’s e-commerce sales.”
According to the study, e-commerce sales increased 3% in Europe and 7% in both the US and Asia in 2022. Global growth is expected to achieve a 9% CAGR through 2027 – not fully achieving the 12% to 14% pre-Covid trend, but still more than double the projected brick-and-mortar retail growth of just 4%.
e-commerce winners and laggards
The survey focused on six different e-commerce criteria that can serve as leading indicators of the maturity level of each participating organisation:
• Digital investments out of total sales.
• Number of initiatives supporting e-commerce.
• Number of ambitious initiatives, maturity of tech stack.
• Organisation structure.
• Team agility.
CPG and retail respondents were then split into groups of “winners” (businesses that reported post-pandemic growth above 30% per annum and are confident of seeing the same or higher growth to 2027) and “laggards” (organisations reporting post-Covid growth of 10% or less per annum and lacking confidence about their future e-commerce growth). Winners made up 27% of retailers and 20% of CPG companies, with 21% of the retailers and 25% of the CPG businesses surveyed being laggards.
“In the realms of both retail and consumer packaged goods, the divide between e-commerce frontrunners and those trailing behind is unmistakable, yet it remains a gap that can be bridged,” said Robert Derow, BCG’s leader for digital growth in North America and a co-author of the report. “Many markets and categories are actually still years away from full e-commerce maturity, with tailwinds strong enough to justify investing greater capital and resources into winning capabilities and organisations.”