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The back-to-school season will follow a disappointing 2015 holiday season and winter for many US retailers, but the remainder of 2016 should bring some moderate improvement. eMarketer expects US retail sales will increase 2.6% in 2016, up from 1.4% growth in 2015, as explored in a new eMarketer report, “Back-to-School Shopping Preview 2016: The Shift to Ecommerce Accelerates” (eMarketer PRO customers only).
Although a modestly better US retail climate should provide a tonic for some iconic retail brands, such as Macy’s, Target and Best Buy—which posted disappointing earnings in Q1 2016—it won’t be a cure. Their problems revolve less around current economic conditions and more around changing consumption patterns that are driving more apparel and electronics sales online, where margins are lower, or into other product categories, such as automobiles or sportswear. US auto sales in 2015, for instance, surpassed a record set in 2000.
Still, the overall US retail story for Q1 2016 was positive, with year-over-year sales growth of 3.6%. eMarketer believes Q1 brought some of the year’s overall retail activity earlier than usual, resulting in slightly slower sales growth of 2.0% in Q2. By the time the back-to-school season hits its stride in Q3, sales growth will rebound to 2.5%. Even with the dip in Q2, 2016 will outperform 2015 in each quarter.
In the core back-to-school months of July and August, eMarketer projects US retail sales will increase 2.6%, up from 1.6% growth in 2015. The season will represent 17.2% of full-year retail sales, which will remain unchanged from the previous three years.
Additionally, ecommerce sales have consistently outpaced expectations over the past 12 months, leading eMarketer to revise its projections. eMarketer forecasts US retail ecommerce sales will grow 15.7% in 2016, the highest annual increase since 2011, and climb steadily through 2020. By 2018, ecommerce will surpass 10% of total retail sales in the US.
Ecommerce is pulling up overall retail: 43.3% of US retail sales growth will come from ecommerce sales in 2016. Although that share will slow from 66.7% the year before, the projected $53.76 billion in additional ecommerce sales this year will represent an absolute increase over the 2015 figure.
The second half of 2016 should be stronger than the first half, with eMarketer projecting year-over-year US retail ecommerce sales growth of 15.8% in Q3 and 16.3% in Q4. As high as these numbers are, they are made even more impressive by the fact that they started from a high base after very solid growth in Q3 and Q4 2015, when sales grew at 15.2% and 15.7%, respectively.
eMarketer expects US ecommerce retail sales during the core back-to-school shopping months of July and August will grow 15.3% this year, up slightly from 15.2% in 2015. The rapid growth of ecommerce during the back-to-school season is roughly on par with ecommerce growth for the year as a whole, so the back-to-school share of full-year retail ecommerce sales should hold at 16.5%. As a share of total retail during the back-to-school season, ecommerce will rise to 7.9% in 2016.
eMarketer PRO customers can view the full report here.
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