Retail E-Commerce Continues Slow Slide AUGUST 21, 2009

Consumer spending recovery lags

eMarketer has revised its forecast of US retail e-commerce sales growth after a lackluster first half of 2009. Retail e-commerce sales, excluding travel, are expected to contract by 3.1% this year.

Growth will resume in 2010, at 5.5%, as consumer spending recovers from the recession. By 2011, eMarketer expects pent-up demand to accelerate growth, peaking in 2012. Retail e-commerce sales will continue to increase, but the rate of growth will fall off in 2013, continuing the pre-recession trend of strong but slowing growth.

Previously, eMarketer projected flat growth for retail e-commerce, expecting declines in the first half of the year followed by second-half recovery. But August figures from the US Department of Commerce (DOC) show sales decreased more than expected in Q2, falling 4.5% year over year to $30.77 billion.

”While many economists see signs of an economic recovery, consumer spending online and offline is still in the doldrums, as evidenced by poor back-to-school sales,” said Jeffrey Grau, eMarketer senior analyst.

According to comScore, US retail e-commerce sales declined by 1% year over year in Q2 2009, after a stagnant Q1.

“DOC retail e-commerce sales estimates have historically validated comScore’s sales figures,” noted Mr. Grau. “However, for Q2 2009, comScore reports a less severe—yet nevertheless dismaying—sales contraction.”

“The marginally negative growth in Q2, on the heels of flat growth in Q1, signals that online retail spending has yet to turn the corner after a disappointing end to last year,” said comScore chairman Gian Fulgoni in a statement.

“Unfortunately, it appears that the reality of nearly 10-percent unemployment and rising gas prices, coupled with an increased savings rate, continues to hold down consumers’ discretionary spending,” added Mr. Fulgoni. “It may still take some time to dig our way out of this recession.”

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