US retailing continues it’s move to online
The US retail market grew by 2% during Q3/2023. That is significantly less than in recent years but less below the longer-term average.
The growth was driven primarily by the online channel (”Non-store retailing”), which grew by 7,2% while the stores grew only by 0,9%. This pushed the online channel to represent 18,3% of all retail revenues in the US during the third quarter.
Online back to historical growth rates
The online channel seems to have returned back to its historical trajectory. Traditionally (pre-pandemic), online has increased its share of retailing between 0,7%-points to 1%-point compared to the same quarter a year ago.
For the past five quarters, online share has increased between 0,9%-points and 1,1%-points per quarter compared to the same quarter a year ago.
This has enabled the online share of all retailing to almost double in eight years (9,8% in Q3/2015).
General Merchandise & Health outgrowing the market
The two biggest growth drivers in the US retail markets have been (alongside online) the General Merchandise (GM) stores and Health & Personal care stores. The GM category has been driven by Warehouse clubs & superstores, which combine groceries and low prices, which seem to work well in these times worldwide.
The Health segment recorded the fastest growth, which seems to be growing in any market. During the last 35 quarters (since Q1/2015), the Health segment has grown continuously, with only three declining quarters, one being the start of the pandemic.
Electronics with a surprise growth, home continuing to decline
Since Q4/2018, Electronics stores saw almost continuously their revenues decline for four years until Q4/2022. Only during the post-pandemic spending boom could drag the segment into growth.
For the first half of 2023, the Electronics segment grew very slowly. However, in the third quarter, the segment jumped 5,5% growth.
A somewhat similar development can be seen in the Home & furnishing segment. The difference is that Home stores started to struggle only after the pandemic and have continued to do so for six straight quarters. The steep decline continues with -8% decline in revenues during the last quarter.
One common denominator for both segments is the rise of online.
According to Census Bureau segment-level online numbers (in 2021), 46% of Home product revenues came from online, and 47% of Electronics revenues came from online.
Restaurants continue to outgrow grocery stores
One of the most extended trends in the US retail data is the rise of restaurants as a place to spend money on food. Restaurants have gnawed a share of money spent on food away from the grocery stores for three decades.
This trend has continued after the pandemic lockdowns. During the third quarter, restaurants grew 4,6%, whereas grocery stores grew by 3,8%. Thus, the difference in growth has declined significantly.
The share of all money spent on food that goes to restaurants has stabilized at 52,9% during the last quarter. But the long-term trend seems to be grinding more and more share towards the restaurants.
