Americans in 2022 will spend $1 trillion online for the first time, compared to the $885 billion spent online in 2021, according to software giant Adobe.
Adobe officials believe online spending habits formed before and during the pandemic are enduring despite COVID-19 cases waning in the U.S. and some traffic in stores returning in recent months.
“A lot of the behaviors and choices by consumers over the past two years are things they will tend to stick with,” Taylor Schreiner, senior director at Adobe Digital Insights, told WWD. “We will see persistent and consistent growth in e-commerce.
“Prior to the pandemic, there were 11 to 15 percent growth rates. In 2020, we saw a massive 40 percent leap forward, and on top of that a 9 percent leap last year,” Schreiner said. “[For 2022,] the medium estimate is 13 percent growth in online which is back to pre-pandemic rates, and that’s off of a much higher base.”
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Through two years of the pandemic — March 2020 through February 2022 — U.S. consumers spent $1.7 trillion online, $609 billion more than 2018 to 2019 combined.
But brick-and-mortar retailing is showing signs of life, which would naturally cut into some online spending, although it’s still way below 2019 levels.
According to Springboard, which tracks foot traffic in stores and malls, February’s traffic in downtown stores was 34.9 percent below February 2019, an improvement from January 2022 when traffic was down 42.3 percent from January 2019. That was a 20.9 percent month-to-month gain, the biggest lift since March 2021, according to Springboard.
“Downtowns also clearly benefited from Presidents’ Day in the final week of the month, with traffic on Sunday, February 20, strengthening so significantly that it was 3.5 percent higher levels in 2019, whilst on Presidents’ Day itself, foot traffic remained a third lower, down 29.5 percent from 2019,” Diane Wehrle, Springboard’s marketing and insights director, said in her report on downtown shopper traffic.
Wehrle cited the influence of hybrid home/office work situations, on store traffic on weekdays versus weekends. She said traffic on weekdays last February was down 39.4 percent from February 2019, and down 18.7 percent on weekends last February from the same month in 2019.
Whether shopping online or in stores, consumers are seriously troubled over rising inflation.
Adobe reported that online inflation, first observed in June 2020, has persisted for 21 consecutive months. The impact was most notable in 2021, where $22 billion of e-commerce growth was driven by higher prices compared to just $4.7 billion in 2020.
In the first two months of 2022, $3.8 billion in e-commerce growth was because of higher prices. Inflation has not deterred demand, however, at least not yet, according to Adobe, with the same two months seeing a 13.8 percent increase in online spending to $138 billion. In 2022, Adobe expects consumers could pay as much as $27 billion more online for the same amount of goods due to inflation.
Asked if inflation is any different online versus the stores, Schreiner replied, “It depends on the category. Groceries move in perfect lockstep,” but generally online prices are roughly 4 percent lower, give or take, with final prices largely driven by price comparisons that retailers and consumers can quickly and easily assess online.
Categories doing the most volume online last year were electronics, apparel and groceries.
Apparel sales seem to be growing modestly online and should top $130 billion in 2022, from $126.2 billion last year and $115.8 billion in 2020, Adobe reported. Apparel has a 14.3 percent share of e-commerce overall, with consumers spending an average of $10.2 billion each month, up from $8.7 billion pre-pandemic, Adobe reported.
Adobe also reported that grocery sales online should top $85 billion this year, compared to $79.2 billion in 2021, and $73.7 billion in 2020 when grocery spending online surged 103 percent due to the pandemic. Groceries is now 8.9 percent of the e-commerce share overall, up from 6.3 percent in 2019 and down slightly from 9.1 percent in 2020. U.S. consumers now spend an average of $6.7 billion online each month for groceries, up from $3.1 billion pre-pandemic.
“E-commerce is being reshaped by grocery shopping, a category with minimal discounting compared to legacy categories like electronics and apparel,” said Patrick Brown, vice president of growth marketing and insights, Adobe. “It highlights a shift in the digital economy, where speed and convenience are becoming just as important as cost savings.”
Electronics, the largest category in e-commerce, should reach $174 billion in sales this year, compared to $165 billion in 2021 and $152.7 billion in 2020, Adobe reported. Electronics has an 18.6 percent share of e-commerce overall and U.S. consumers now spend an average of $13.6 billion each month for electronics, up from $9.9 billion pre-pandemic.
Schreiner said electronics experienced 5 to 9 percent deflation pre-pandemic, and with subsequent COVID-19-related supply chain bottlenecks, prices flattened out.
Adobe also reported the following:
• Consumers have seen 60 billion out-of-stock messages in the last 24 months. They’re exacerbated by supply chain constraints. The odds of seeing an out-of-stock message is now 1 in 59 pages, up from 1 in 200 pages pre-pandemic. From November 2021 through February 2022, consumers saw more than 12 billion out-of-stock messages, a trend expected to persist in 2022.
• Buy now, pay later orders’ growth has slowed, but demand remained strong: BNPL orders are up 53 percent year-over-year; revenue is up 56 percent.
• Curbside pickup of online orders saw strong adoption pre-pandemic though subsequent health and safety concerns gave it a boost. Consumers continue to appreciate its speed and convenience. So far in 2022, curbside pickup represents 20 percent of all online orders among retailers offering the service.
Adobe draws its statistics from its Adobe Analytics unit covering more than 1 trillion visits to U.S. retail sites and more than 100 million stock keeping units in 18 product categories. Adobe’s online inflation insights are formulated from the Adobe Digital Price Index, which is modeled after the Consumer Price Index, and the Fisher Price Index.