Dive Brief:
- Forecasting further growth in e-commerce, a new FTI Consulting report predicts that U.S. online retail sales will reach $1.14 trillion this year, up 10% year over year. FTI Consulting’s 2023 U.S. Online Retail Report projects that nearly half (42%) of retail sales growth this year will be e-commerce.
- After surging during the pandemic, e-commerce sales growth is expected to be 10% or less in the coming years, FTI said, but annual e-commerce growth through 2025 will still be more than double the rate of store-based sales growth.
- The survey of 1,000 U.S. consumers also found about eight in ten shoppers think personalization can improve their shopping experience. Three-fourths of respondents said they would be “very interested” in receiving product offers and ads tailored to them.
Dive Insight:
Though many consumers surveyed by FTI said they are open to personalization, the survey findings also suggest that consumers’ interest in doing so varies from generation to generation.
While less than half (46%) of Baby Boomers want to receive tailored product recommendations, 72% of Gen Z respondents said they would switch retailers for a more personalized experience. Meanwhile, more than half (51%) of respondents said they are worried about product recommendations based on race and gender.
On the other hand, the survey offered some insights regarding areas where consumers are more open to product recommendations. Seventy-seven percent of respondents said they would be interested in personalized content that includes customized pricing and discounts. Nearly seven in ten survey respondents said they were very interested in local recommendations and offers.
“It will not be an easy task for businesses to win the level of confidence from consumers required to have them willingly share their personal data,” J.D. Wichser, leader of the retail and consumer products practice, said in a statement. “Success of AI-driven personalization depends on the extent to which businesses identify consumer concerns and develop strategies that will directly address these concerns.”
FTI Consulting’s e-commerce sales prediction comes after years of high growth. A report from Forrester released in August 2022 predicted that e-commerce sales will reach $1.6 trillion in the U.S. by 2027. Last year, e-commerce sales exceeded $1 trillion in the U.S., a milestone primarily driven by food, pet, baby, clothing and accessories purchases, according to Comscore’s State of Digital Commerce report released in January. During the 2022 holiday season, online shoppers spent $211.7 billion on e-commerce purchases, up 3.5% compared to 2021 and a record-breaking figure, according to an Adobe report released in January.
