Economists' Outlook

Housing stats and analysis from NAR's research experts.

Weekly Retail Update: February 22, 2021

Quarterly e-Commerce

In a year like no other and dramatically impacted by COVID-19, the economy sank into a recession. The combination of increasing virus cases, stay-at-home orders and business operation limitations led to significantly reduced retail brick-and-mortar foot traffic and as a result, substantial retail store closures and significant decreases in retail employment. Although many retailers permanently shuttered, many shift channels to focus on e-commerce for which was already accelerating. As the pandemic progressed, more and more shoppers turned to online shopping.

Line graph: e-Commerce Retail Sales Quarterly, SA, Q1 2000 to Q2 2020

4Q U.S. Census data indicates U.S. consumers spent an astonishing 32.1% more online than in 4Q 2019. Seasonally adjusted estimates of e-commerce sales totaled $206.7 billion for which represents a decline of 1.2% from the $209.2 billion recorded in 3Q 2020. While 4Q’s online growth is almost double the 16.5% growth recorded in 4Q 2019, it represents a deceleration from early pandemic periods.

Considering mid-March, the president made an COVID-19 emergency declaration, 1Q 2020 U.S. Census Bureau data captured only a small portion of e-commerce spending as a result of COVID-19. Online sales for 2Q 2020 indicated a transition of consumer shopping behavior as consumers frantically sought essential products amid store closures and stay-at-home orders.

Line graph: e-Commerce Retail Sales as a Percent of Total Sales Quarterly, SA, Q1 2000 to Q2 2020

Second quarter e-commerce sales were $211.5 billion, an increase of 44.5% from the same quarter a year ago and a 32% increase from 1Q 2020. Total retail sales for the second quarter of 2020 were $1,311.3 billion where e-commerce sales in the second quarter of 2020 accounted for 16.1% of total sales. The scope of the increase from pre-COVID levels of 11.3%, 4Q 2019 to 2Q 2020 16.1% represents a tremendous uptick of e-commerce penetration within a short period.

Bar chart: e-Commerce Retail Sales, Year-Over-Year Growth Quarterly, SA, 2019 and 2020

Online shopping tapered in 3Q 2020 as consumers settled into their "new normal" and as stores eased into reopening. Despite the slowdown, e-commerce grew 36.6% in 3Q 2020, up from the 17.3% recorded in 3Q 2019. E-commerce’s share of total retail sales historically increases every year as consumers become more at ease with online shopping and as retailers optimize their e-commerce operations.

Line graph: U.S. Total Retail vs. e-Commerce, Year-Over-Year Growth 2011 to 2020

While 4Q 2020 U.S. retail e-commerce sales slightly decreased from 3Q 2020, total retail sales for 4Q 2020 increased by 0.5% from the $1,469.7 billion 3Q 2020 figure to $1,476.9 billion. 4Q 2020 e-commerce estimates increased 32.1% year-over-year while total retail sales increased 6.9% over the $1,381.3 billion recorded the same time last year. E-commerce sales in 4Q 2020 account for 14.0% of total sales, a marginal decrease of from 3Q 2020s 14.3% of total sales.

Total e-commerce sales for 2020 were estimated at $791.7 billion, which represents an uptick of 32.4% from 2019 sales. Total retail sales over 2020 rose 3.4% from 2019 sales. E-commerce sales in 2020 accounted for 14.0% of total sales whereas, e-commerce sales in 2019 made up 11.0% of total sales.

Despite e-commerce's slowdown in 4Q 2020, we are in a retail environment that reaches beyond brick-and-mortar. January’s advanced retail sales estimate non-store retail sales rose 10.9% from December and an incredible 28.7% above January 2020 sales. While e-commerce's growth rate will ease up to some extent as retail brick-and-mortar regains some sense of normalcy throughout 2021, we expect consumers to maintain many of their digital habits.