FTI Consulting: U.S. Online Retail Sales to Reach $1.14 Trillion in 2023
Nearly 80% of Online Shoppers Prefer AI-Driven Personalization and Believe It Enhances Their Experience
Washington, D.C., July 10, 2023 — The Retail & Consumer Products practice at FTI Consulting, Inc. (NYSE: FCN) projects U.S. online retail sales will reach $1.14 trillion in 2023, an increase of 10% from the previous year, according to FTI Consulting’s 2023 U.S. Online Retail Report. Consistent with its pre-pandemic rate, e-commerce is estimated to capture 42% of total retail sales growth in 2023. E-commerce sales growth (year-over-year) is expected to moderate to 10% or less in the coming years, and annual online sales growth through 2025 is expected to double the rate of store-based sales growth.
In addition, this year’s report includes the findings of a new survey detailing consumer interest and concerns surrounding AI-driven shopping personalization, which indicate that roughly 80% of shoppers believe personalization can enhance their online shopping experience. Seventy-five percent of those surveyed said they would be “very interested” in receiving personalized product offers and advertisements.
“AI-driven personalization can greatly benefit retailers looking to close the gap between consumers and the products they want,” said Kurt Staelens, a Senior Managing Director in the Retail & Consumer Products practice at FTI Consulting. “It’s not only a more efficient process, but also a competitive advantage, with roughly 7 in 10 respondents saying they were more likely to switch to retailers offering better personalized experiences.”
While interest in personalization is growing, consumers still express concerns. Only 48% of respondents said they are comfortable sharing personal data like browsing history, demographic information and transaction history. One of the most significant challenges for retail platforms, according to the survey, is that only 38% of respondents trust them to manage their personal data.
“It will not be an easy task for businesses to win the level of confidence from consumers required to have them willingly share their personal data,” said J.D. Wichser, Leader of the Retail & Consumer Products practice. “Success of AI-driven personalization depends on the extent to which businesses identify consumer concerns and develop strategies that will directly address these concerns.”
Additional takeaways from the survey include:
- Baby Boomers are much less inclined to dive into personalization, with only 46% of those surveyed expressing interest in product recommendations tailored to their interests, and only 21% trusting online retailers with personal data.
- 77% of respondents said they would be most interested in personalized content that includes customized pricing and discounts.
- 69% of respondents were highly interested in local recommendations and offers.
- 51% of respondents said they had concerns about racial and gender-based recommendations.
- Gen Z is the age group most likely to shop around, with 72% of respondents saying they would switch retailers for a more personalized experience.
About the Survey
FTI Consulting conducted a survey of 1,000 U.S.-based respondents during the second half of June 2023, across varying demographics to understand consumers’ openness to personalization; identify areas where consumers expect or want more personalization; and identify concerns regarding personalization, especially as it relates to maintaining a balance with privacy. FTI Consulting assessed responses based on gender, income and age groups.
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Source: FTI Consulting, Inc.