2017 U.S. Online Retail Forecast | FTI Consulting

2017 U.S. Online Retail Forecast

You know the future has arrived when life seems to resemble an episode of the Jetsons.

Retail & Consumer Products | Corporate Finance & Restructuring

October 16, 2017

drones

Recently announced plans by Amazon.com, Inc. (“Amazon”) and Wal-Mart/Google to have airborne dirigibles serve as distribution centers for drones that will deliver merchandise to households sound very much like a contraption from a Jetsons cartoon. Online retailing has become a mainstay in consumers’ lives and continues to extend its reach in all sorts of ways, some unimaginable until now.

The conundrum for the retail sector is that regardless of all this innovation, online commerce is essentially a zero-sum game. One merchant’s loss of an in-store sale is likely to be a gain for the online channel. Online shopping changes how and where people shop but doesn’t much alter consumer spending dollars in the aggregate. Hence the relentless battle going on between clicks and bricks for consumers’ mindshare and wallet share.

The prevailing storyline in business media suggests that much of store-based retailing is damaged or doomed. But we know there is no day ahead when Americans will be doing all their shopping online. Store-based retailing will continue to be the dominant form of merchandise shopping for the foreseeable future, even in a diminished capacity, and so we must recognize that online sales growth and market share will eventually moderate. Exactly how and when will this happen? This is where the debate gets lively. We maintain that constraints which govern the limits of natural growth will determine these ceilings in various product categories and that these limits or ceilings can be known and quantified long before they are reached.


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