The consumer continues to beat spending expectations with 4.1% year-over-year growth, 4.9% year-over-year in core goods (excluding food services, gas, building materials and motor vehicle dealers), according to the U.S Census Bureau. Cyber Monday and e-commerce natives helped lead the charge for this growth. Shopify reported $9.3 billion in Black Friday and Cyber Monday sales, a 24% increase from last year.
Consumers are choosing e-commerce because of the convenience along with the ability to shop deals more broadly than in-store. Faster payment options like Shop Pay have been adding to the technology advantages, making checkout faster and more convenient.
According to Shopify, Shop Pay payments were up by 60% year over year. Artificial intelligence chat bots were also helping drive additional sales as companies begin to leverage AI to provide customer support. With a tight labor market and unemployment remaining under 4%, retailers are leaning on automation to help keep up with consumer expectations of service.
E-commerce is on the path to hit $2.55 trillion by 2027, which will make up 33% of U.S. retail sales from 25% today, according to Bloomberg Intelligence.
Consumer expectations are rapidly expanding, fueled by advancements in generative AI technology, which is expected to boost conversion rates through personalized product recommendations and optimized pricing strategies. While Amazon maintains its position as a pioneer in innovation and convenience, e-commerce brands are swiftly progressing, thanks to technology partners that are introducing cutting-edge solutions to the mid-market segment.
In addition, e-commerce is having an impact on in-store shopping, too. As e-commerce sales capture more market share, retailers look to bring the convenience of online shopping to brick-and-mortar locations. By leveraging technology to improve conversion rates with e-commerce technology and increasing brand loyalty with an in-store experience, retailers hope to gain consumer loyalty across their sales channels. Look for lines to be blended between e-commerce and in-store retail with cross-platform transactions, like the approach of buying online and picking up in the store.
The takeaway
As the digital buying experience grows in importance, companies must focus on their technology platforms. Consumer experience and convenience will be at the forefront of customer conversion and retention. The winners will be those that meet or exceed customer expectations of their digital platforms.
Read more RSM retail insights in our industry outlook.
