FTI Consulting Inc. is projecting that US online retail sales will reach $1.2 trillion in 2024, an increase of nearly 10 percent from last year, according to the firm’s 2024 Online Retail Report. The firm’s Retail & Consumer Products practice, which conducted analysis for the report, expects US e-commerce sales to account for 22.7 percent of retail market share in 2024, compared with 21.6 percent in 2023.
Despite continued growth, e-commerce market share of total retail sales is expected to decelerate compared to the pre-COVID-19 period and plateau near 35 percent by the middle of the next decade. Several product categories have already reached that level, including toy and hobby, office supply, consumer electronics, books and magazines, music and videos, computer hardware and software, home furnishings, and sporting goods.
“E-commerce in the US is in a maturing phase as it returns to pre-pandemic normalcy, but it continues to capture market share, primarily from store-based retailers,” said J.D. Wichser, a senior managing director and leader of the Retail & Consumer Products practice at FTI Consulting. “As the retail landscape evolves, it is critical for businesses to turn their strategies toward omnichannel integration and technological innovation while adapting to shifting consumer demands to maintain a competitive edge in a crowded field.”
E-commerce sales growth represented 46 percent of total retail sales growth in 2023, which is consistent with pre-COVID-19 capture rates, and 57 percent in the first quarter of 2024, its highest rate since 2017, excluding the pandemic period. The report predicts that total US e-commerce sales, will not see a mid-teen annual sales growth rate year-over-year, as they did consistently for more than a decade prior to COVID-19, but will sustain high- to mid-single-digit sales growth for several more years.
The report also highlights several trends to watch in the US retail industry, which demonstrate an effort to adjust to market changes. US retailers are shifting their stores to fulfillment centers to optimize returns and inventory, managing store fleets by closing under-performing stores and reducing labor, blending digital and in-store customer journeys, and using artificial intelligence to engage more closely with consumers.
“More retailers are creating personalized shopping experiences and promotions for consumers, which include the use of Generative-AI content,” said Kurt Staelens, a senior managing director in the Retail & Consumer Products practice at FTI Consulting. “This type of customization has the ability to attract and retain customers and encourage them to immerse themselves with the products they want.”