E-Commerce Spike in Early 2020 Gives Way to Increased Store Sales

• Total annual retail sales (excluding auto, gas and restaurants) grew by 6.4% year-over-year in 2020 to $4.0 trillion.
• E-commerce sales surged at the start of the pandemic in Q2 2020 but decreased by 2% in the second half of the year, while in-store sales increased by 12%.
• Increasingly, the retail store is supporting e-commerce, as 62% of all online orders are expected to be fulfilled by physical stores in 2021.
  
  

Sharp job losses, government-mandated closures and health concerns created the perfect storm for retail in 2020. Despite this, total retail sales grew by 6.4% from 2019 to a record $4.0 trillion, aided by government-assistance payments to consumers during the pandemic (e.g., stimulus checks and enhanced unemployment benefits).

Figure 1: Total Retail Sales & Online Penetration*

Source: U.S. Census Bureau, CBRE Research, February 2021.
* Total retail sales exclude auto/gas/food services & drinking places.

With an added impetus from the pandemic, online sales reached a new high of $788 billion in 2020, a 32% increase—also a record—from 2019. During the first wave of the pandemic in Q2 2020, online sales surged by more than $51 billion from Q1 2020 to $212 billion—a 32% increase. E-commerce accounted for 23% of all retail sales in Q2 2020 as physical stores were under severe COVID-related restrictions or shut down entirely. As restrictions were eased in Q3 2020, in-store retail sales increased by 12% from Q2 2020 to $818 billion, while online sales decreased by 1% to $209 billion. In-store retail sales growth leveled off in Q4 2020, remaining at $818 billion, while online sales totaled just over $206 billion, a decrease of 1% from Q3 2020.

Figure 2: Year-over-Year Online vs. In-Store Sales Growth

Source: U.S. Census Bureau, CBRE Research, February 2021.

Online sales increased by more than $191 billion in 2020, accounting for 20% of total retail sales. As detailed in CBRE’s 2021 Retail Market Outlook, online sales growth is expected to slow in 2021 as more consumers receive COVID-19 vaccines and can safely return to physical stores. Despite a slowdown in growth this year, CBRE expects online sales to account for up to 25% of all retail sales by 2025.

Physical retailers are beginning to take advantage of consumer appetite for online sales. ICSC estimates that two-thirds of them increased their number of stores that offer click-and-collect fulfilment options in 2020 and that 62% of all online orders will be fulfilled at brick-and-mortar stores in 2021. As detailed in CBRE’s The Future Hybrid Store report, given the high cost of last-mile logistics for quick delivery to consumers, retailers will increasingly use their physical stores to fulfill online orders.

The COVID pandemic has accelerated the retail industry’s ongoing digital transformation. Despite large gains in online sales, 80% of all retail sales still occur in stores. Looking ahead, we expect that retailers across all categories will continue to expand their omnichannel store capabilities to complement their growing online business.
1 All statistics in this report are based on U.S. Census Bureau data except where otherwise noted.
2 “The Impact of COVID-19 on the Evolving Use of Retail Real Estate”, International Council of Shopping Centers, 2021.