ABA Banking Journal - September 2014 - (Page 8)

the economy BY WELLS FARGO ECONOMISTS One recent trend within retail sales has been the E-COMMERCE AS SHARE OF NONFOOD RETAIL SALES sizable growth in nonstore sales. The latest Census Percent, seasonally adjusted report on monthly retail sales shows that nonstore sales rose 8.1% over last year's levels-far exceed7% E-commerce as aspercent of total:Total: 6.2% 6.2% E-Commerce a a Percent of Q1 @ Q1 @ ing the growth rate for the other categories within 6% retail sales. One key component of nonstore retail sales is online sales, or e-commerce, which has 5% played an increasing role in driving overall sales in recent years. Online retailers are defined as retail 4% outlets that have at least 50% or more business online. There has been a clear shift in the com3% position of retail sales toward greater e-commerce over the past decade, and this shift is spilling over 2% to other areas of the economy. While we do not predict the demise of traditional brick-and-mortar 1% retailers, new technologies will continue to put pressure on traditional retailers as they are forced 0% to compete with their online counterparts. 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 After a dramatic decline during the Great Recession, retail sales growth has fluctuated near historical norms since 2010. More favorable economic conditions along with job products and then purchase the prodgains helped to support the sustained growth in retail sales over the past several uct at the best price. months. Even with sustained gains in retail activity, there has been a notable shift While it is unlikely that technology in the composition of total sales activity. Since the early 1990s, nonstore retail will ever completely replace the trasales growth rates have been consistently above the rate of overall retail sales. ditional shopping mall, competition Although the recent economic recovery has contributed to these upward from the internet has emerged as one gains, the driving force behind the discrepancy of total retail sales and e-comof the greatest challenges facing brickmerce sales growth has been the proliferation of new technologies. The increasand-mortar stores today. ing adoption of smartphones and tablets, as well as the rising number of internet E-commerce sales are expected to users, has been crucial for accelerating e-commerce development. continue to accelerate at a healthy Consumers also have become progressively more tech-savvy since the technolrate in the coming years, and they ogy boom, and, as a result, their tastes and preferences have evolved. Many indishould continue to affect the compoviduals now prefer the benefits of using technology to make online purchases. sition of future retail sales. The net For example, one reason buyers may decide to purchase online is timeliness; result of evolving technologies and a with high-speed search engines now allowing consumers to search through thoushift in consumer tastes and prefersands of store inventories in seconds, the hours spent browsing at a shopping ences represents the changing face of mall are saved. retail sales. Another trend that has come about in recent years has been an increase in price-comparison shopping through the use of mobile technologies. A 2013 The authors, all with Wells Fargo Securisurvey by Forrester Consulting found that 75% of consumers would be swayed ties, LLC, are Eugenio Alemán, senior to purchase a product online, rather than in store, if free shipping was available. economist; Michael Brown, economist; and Many customers now browse shopping malls and online retailers to compare Zachary Griffiths, economic analyst. 8| ABA BANKING JOURNAL | SEPTEMBER 2014 PHOTO: SHUTTERSTOCK.COM The changing face of retail sales http://www.SHUTTERSTOCK.COM

Table of Contents for the Digital Edition of ABA Banking Journal - September 2014

Chairman's View
Editor's Column
The Economy
Bank Notes
Picture This
Sales of insurance pay off
Pass the Aspirin
Payment trends: Threat or opportunity?
Working together to protect against identity theft
Tech Topics
Compliance Inbox
Around the ABA
First Person

ABA Banking Journal - September 2014

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