A weekly podcast with the latest e-commerce news and events. Episode 285 is a deep dive into the data from 2021 and holiday 2021.
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The US Dept of Commerce December Advanced Retail Sales Data is out, which gives us a full look at 2021 and the 2021 holiday season. So Episode 285 is a data deepdive into 2021.
If you want to follow along, we’ve made a deck with all the data available at https://retailgeek.com/2021-commerce-recap
Data Sources
US Retail & E-Com Sales Data: US Dept of Commerce
E-Commerce Estimates: eMarketer
Retail Foot Traffic Data: Placer.ai
Web Traffic Data: Similar Web
Holiday Estimates: Adobe, Salesforce, Mastercard
Episode 285 of the Jason & Scot show was recorded on Thursday Jan 20th, 2022.
Transcript
Jason:
[0:23] Welcome to the Jason and Scot show this is episode 285 being recorded on Thursday January 20th 2022 that’s a heck of a lot of 2012’s.
I’m your host Jason retailgeek Goldberg and as usual I’m here with your Cohoes Sky Wingo.
Scot:
[0:41] Hey Jason and welcome back Jason Scott chaussures Jason is kind of a shame we neither of us were able to make it in our F but,
one of the things I don’t miss is every year that I’ve gone to in our f for the last three times I’ve went I’ve had trouble getting there or been stuck there so I think
then our F should use this opportunity to move that show out of January and maybe look at something like March or something if they’re going to be in New York.
Jason:
[1:09] Or to the like Bahamas or something.
Scot:
[1:12] Yeah even better yeah let’s make it a destination of it.
Jason:
[1:17] You know you have my vote I’m not sure you have a majority of votes see you if you have mine that would be awesome.
Scot:
[1:24] Yeah just watching and it seemed like some folks went and then they had a lot of cancellations so seemed like it was in kind of one of those weird.
Hybrid states were if you went and then,
person you are going to go see present canceled you sat there in a room with people watching a zoom so that’s number Super satisfying but I do think it seemed like some folks you and I know got together and had some dinners and had fund so hopefully that was that was good for everyone.
Jason:
[1:50] Yeah I had a little bit of foam oh I think you know some people I would have liked to see you know I saw you know social media of them getting together and whatnot and.
It’s just super bad luck I have a feeling if this show was a month later it would be a lot less controversial that traveled to.
Scot:
[2:09] Yeah and what did you want to talk about this week.
Jason:
[2:14] Well you know if we had gone to NRF one of the things that I always like to do it in our f is kind of check in with a lot of our co-workers in the industry and kind of you know get a consensus,
about how the year ended up for everyone and what they thought the big issues were going to be for 20 21.
So since we didn’t get to do that at shop at NRF I thought maybe we could do it on this podcast for our listeners.
Scot:
[2:42] Yeah that sounds good and then I know you always put together a little for your clients kind of the summary deck and I know that’s hard for our podcast listeners so do you have a way to solve that.
Jason:
[2:55] Yeah so what I thought I would do I put together like a 36 slide deck completely full of numbers and what I thought I would do is describe all of the graphs on the podcast.
Scot:
[3:09] Sounds good that sounds good and it’s going to be a we’ll go through it and intricate detail data point by day.
Jason:
[3:14] Yeah because the one complaint I get about the show is that it’s not hard enough to listen to.
Scot:
[3:18] That’s that’s from your mom.
Jason:
[3:22] So that probably isn’t going to work but here so here’s what I did think I do like instead of,
just charging the fortune that we charge clients to go through this presentation I thought I would make a version of the whole deck available to all our listeners so in the event you do want to follow along with the visuals and see the actual data,
we will put a link in the show notes you can hit pause for a second,
you can open up the deck and I will tell you what slides were talking about in case you want to follow along but but Scott keep me honest here we’ll try to make sure we’re talking about in a way that you can kind of just,
just listen along on the podcast and then look at the deck later if that’s the way you prefer to do it.
Scot:
[4:03] Yeah this is a good time if you like receiving awesome decks for your subscription here which is essentially free this is a good time to hit the five star review we always appreciate that and yeah
because we because this is a audio medium we are going to paint pictures with our words and you will see the slides form before your very eyes almost like augmented
virtual reality we’re going to take you to the metaverse on this thing.
Jason:
[4:31] Exactly it’s a meta verse deep dive into a retail in 2021 and let’s jump right into it so.
[4:42] Super quick recap last week the US Department of Commerce publishes published their December
Advanced Data so that gives us the last month of data we need to see the whole year so it’s super exciting for all of us get data Geeks because we now have a complete set of data
the one thing to remember is.
It’s an advanced look and so it doesn’t have the granularity of categories that we would like and one of the categories it doesn’t have is
e-commerce which is highly unfortunate so,
the the Deep dive for the whole year with e-commerce broken out will actually be available in mid-February and that’s also when they published their quarterly.
They’re q4u Commerce data which is a separate report so so we have most of the interesting facts there maybe a couple things that filter in last,
next month but the top line if we add up all retail sales for 2021 we sold just over six point six trillion dollars of stuff last year which is
eighteen percent growth over 20.
[5:53] And it’s 22 percent growth over 2019 and so,
if you do have the deck and you were looking at slide for I show you the last 30 years of growth and the thing that will stand out at you is that this year’s growth.
Is is almost double the average growth we’ve had in any of the last 30 years so unprecedentedly good year.
Scot:
[6:20] This is all retail or not talking e-commerce has.
Jason:
[6:22] Yeah this is this is pure retail will we will double click into e-commerce a little bit later and you know reminder there’s a lot of controversy about what the definition of retail is and so you’ll see millions of different numbers out there and it’s because.
11 data set has automobiles in it and one has doesn’t one has gas in it and one doesn’t you know they’re all these different things I’m using.
The unadulterated numbers from the US Department of Commerce so it does include automobiles it does include gas it does not include restaurants it’s what we call,
in a ICS code 44,000.
Scot:
[7:03] Cool good old code it 44,000.
Jason:
[7:07] If anyone wants to catch me offline and ask for like a different spin I’m happy to talk about how the numbers change when you change your definition but I think that’s too complicated for for the podcast but so before I go any further.
Like is that does that surprise you at all it has is that has that been your perception that these are Monster year that 2020 and 2021 more Monster years for retail because I feel like that’s not necessarily the narrative we’ve been getting in some of the Commerce media.
Scot:
[7:37] Yeah no it feels that is a surprise it makes sense and I’m looking at the slide but it makes sense that we were effectively spring-loaded right because you had the shutdown people really,
you know couldn’t or didn’t buy things from March 20 through and so there’s put up demand but what’s interesting is you really don’t see,
unlike the Great Recession about it no nine you don’t see a retraction before this the splurge and this is way way bigger than that period of time so it is it is surprising.
Jason:
[8:08] Yeah so so,
in aggregate retail did awesome and then on slide 5 I give you this fun way of looking at the data that you and I helped
help kind of evolved together but the idea is that we give you a separate
line chart for 2019 2020 and 2021 and so you can kind of see.
You know how the year stack up against each other and you know.
[8:35] 20:19 was the unaffected by the pandemic than 20/20 happen and of course there was this huge dip in April
when the pandemic first got real for everyone because the NBA cancelled games and it recovered super quick and then you know the rest of 20/20 was actually above 2019 so retail grew.
From 2019 and 2020 even though we were like right in the thick of the pandemic and then in 2021 retail really shot up and the.
The hypothesis here is there are two things that really caused this number one there was a bunch of.
Economic stimulus that was poured into the economy right like there’s a lot of extra money available and consumers were in,
like generally really good Financial shape so there was a lot of potential to spend and then a lot of the things that might have gotten some of that money experiences like travel in restaurants and vacations,
we’re not available in the most consumers so
instead of paying money for a gym you bought a Peloton instead of going to a restaurant you bought groceries and instead of going on vacation you you got new patio furniture right and so you know the combination of,
more money and less things to spend and on ended up being super favorable to retail overall.
Scot:
[9:59] Yeah that makes it so that it’s really a factor of the stimulus is what you’re saying.
Jason:
[10:06] Yeah and we’ll talk about the downside of that if they end of this podcast but so that’s the industry average and I would remind everyone to be cautious.
In thinking about averages because,
very few retailers experience the average right like in general there were big winners and losers based on categories and I’m for the purposes of the podcast we’re not going to talk about category growth or foot traffic.
From 2022 2021 because 2020 was such a weird year because of the pandemic I actually am going to jump ahead in the deck to slide 9 which is where we start talking about,
comparing.
Last year to 2019 so like what the cumulative changes were over the from before the pandemic to you know at the end of the second year of the pandemic so.
Over that two-year growth we grew 22% as I mentioned earlier and so I actually.
[11:09] Put together look at what the average to your growth was every year for the last 30 years and in general the average two-year growth is around 10 to 12 percent so 22% is,
unprecedentedly High.
Two year growth and remember like you know there was in 2008 there was this recession and there was negative growth so you’d think the the year-over-year from that recession would be super high but but this.
2020 and 2021 year is basically the the best years of retail in our lifetime.
And so then I go to slide 10 where I show you how fast each category grew and remember if the industry grew 22%.
You really want to be growing faster than that 22% so the categories that one the grew faster than 22% we’re your new favorite category automobiles.
So they grew at 24 percent which was mildly surprising to me because you,
you know early on you would assume Car Sales slowed down significantly and then of course there have been all these chip shortages that’s made it slightly hard to buy cars,
and yet cars were still one of the bright spots does that surprise you at all or were you totally dialed into that.
Scot:
[12:30] Yeah the counter is the used markets on fire and they’re marking the cars up so there’s kind of like an inflation of car prices in there that I think.
One of the reasons so if there is a car dealers are taking these pretty exorbitant markups on those,
which is kind of short-sighted but that’s what they’re doing and yeah so so it doesn’t surprise me too much when you know
what surprises me is where did it all go so we had this like tsunami you know anything about retail it’s you know it hasn’t been over.
You know like what,
10% for a long time and then you’ve got in the two year ago comparison you get up to maybe like 15% so it’s like a surge year where did it show up like I can’t think.
You know amongst the public companies the Walmarts the targets and that kind of stuff I don’t really see it I don’t see them just like,
blowing up expectations and saying oh my God so much money flooded into our coffers.
I kind of wonder where it went or maybe it’s going to show up and you know in when you when you chart it out it looks like a lot of it came at the end of 21 so maybe we haven’t seen it come out and the public markets but it’s going to be you know I kind of wonder where it went.
Jason:
[13:42] Yeah so I would argue that we are seeing it like in the big companies in the Amazon Walmart Target Kroger and certainly Home Depot and dicks we are seeing it.
And so I think the car one is a harder one to see because the car you know the actual car dealers are so fragmented because they’re all franchisees.
Scot:
[14:05] Carvanha has seen it carvanha.
Jason:
[14:06] The Used Car Guys for sure saw it so let’s come back to that in one second let’s talk about the other two categories that were above the industry average
building materials and garden supplies right so that’s Home Depot and Lowe’s
and you know they’re there to your growth Stacks were like significantly up from previous years and again.
Part of the reason they would be up as people spend a lot more money on their homes when they were traveling last and then and so that category group thirty percent over two years and then Sporting Goods grew 38 percent over two years
so that’s you know dicks and sporting goods and and those folks and they were seeing like
like I want to say the two year growth stack on dicks would be is like 94% or something so.
Scot:
[14:56] Yeah.
Jason:
[14:59] So and then the categories that still like had,
by historic standards great growth but did not grow as fast as the industry average grocery stores so only grew 16 percent I have to say that surprised me a little bit because I would have.
Expected you know with the hit that restaurants took that the grocery would have outperformed the industry average but you know it doesn’t seem like it.
It did and then,
furnishings and furniture and Home Furnishings grew at 21 percent so about the industry average and again because of all the money people spend on their homes I kind of would have expected that to be higher so those two things.
Surprise me a little bit.
And then the the categories that were you know more significantly hurt by the pandemic like gas and clothing,
you know clothing was still up 13% gas was up 15%.
And that’s what hurt looks like right like so you know up 13 percent against the industry average of 22 percent like that’s.
You know kind of the the low end and you know I think if you talk to apparel people during the pandemic they would have said like oh we’re you know we’re experiencing Armageddon if you compare this 13% growth too
you know any of the last five or six years for apparel this would have been a great year.
[16:23] And then the most inexplicable to me of all and I think it just has to do with the mix in this category is Electronics and appliances are only up 6%.
And I I’m totally open if you have a hypothesis cop but like I think everybody bought a lot of extra Home Tech.
So especially the beginning of the pandemic everyone’s buying extra computers for their kids for homeschooling and everybody’s updating their work from home stuff,
and you know over the two-year course of the pandemic you know everybody remodeled their kitchen about new appliances so I’m a little befuddled.
Why that you know that category is literally the bottom of the Barrel in this the US Department of Commerce data and it’s only six percent of growth.
Scot:
[17:13] Yeah let me look at the year.
Jason:
[17:18] I have a so while you’re looking I’ll just I’ll tell you I my.
My unfortunate hypothesis so there’s an enormous flaw in the US Department of Commerce data and that flaw is that they call e-commerce or non stores.
A category.
So you’re either a Peril sale if you sell the clothes through a store or your Anon store sale if you sell the clothes online,
and so if you sell a TV out of Best Buy you’re in electronic sale but if you sell the TV online for curbside pickup.
You’re a.
Non-store sale and so I didn’t mention this earlier but the category that actually grew the most by far during the pandemic is non store sales which are 38% and we,
have any good way to know how that breaks down by category so my hypothesis is the electronics category actually probably
did better but the it over index to sales going online and therefore it gets office gated
in this US Department of Commerce data.
Scot:
[18:32] Yeah and then accentuating this is the supply chain problems hashtag Supply pain where you know a lot of that stuff you would go into the store for especially big appliances where you kind of want to see it and touch it and feel it before you order it,
I know on the order of 10 people that cannot get washers and dryers.
So you know that that was all like this big appliances are in and they’ve been waiting since you know,
Q3 last year to get these things it’s insane so that could have you know so you have this kind of double edged double whammy of a lot of stuff moving
online or non-store from the store in the store or struggling because they can’t get inventory for the shelves and you know every electronics item has a chip.
Jason:
[19:20] Yeah so I do like that I will say it from the data it looks like more of the group The Slowdown was in,
20/20 than 2021 which like kind of argues it like.
Scot:
[19:35] Yeah attribution.
Jason:
[19:37] Yeah so but I don’t I don’t know
and so then so that so far everything we’ve talked about is US Department of Commerce data so I’m also super interested in how many people walked into a store so I asked our friends at Placer AI which is a,
a company that has access to a huge panel of consumers that have software on their phones and it tracks where they go anonymously
and they use that data to forecast.
Retail foot traffic across the country and so I put together a data set so on Slide.
[20:21] 11 of the deck you can see how the 20 21 foot traffic every month compared to 2019 and so for the first half of 2021,
um foot traffic in retail was still down between 10% and 0%,
versus 2019 so fewer people are going to stores in 2021 then we’re going to stores before the pandemic.
And then by July we had our first kind of Positive Growth since the pandemic so July and August we’re kind of up for and six percent over 20 19 respectively,
then we had another slight dip in September and then we had a pretty prominent dip in December of 2021 which was probably the Omicron variant kicking in.
[21:12] But so in aggregate.
There are still fewer people walking in a brick-and-mortar stores in the United States of America in 2021 than walked in a brick-and-mortar stores in 2019.
Scot:
[21:24] There are some it almost like it seems to be correlated an inverse correlation with case count right so in the summer cases were kind of low everything was feeling pretty good and then we had kind of the surge the Omicron surged kind of come back and
here at the very tail end of 21 we saw a really plummet.
Jason:
[21:42] Yeah no for sure and there are lots of people that I have been correlating these statistics to case counts or hospitalizations or.
Or mortality or any of those things in there are strong correlations so you’re certainly right.
[21:56] Um so then I I said all right well let’s double-click on some of the categories that might be interesting and one category that I mainly double clicked on for you was Automotive so for folks that don’t know Automotive is the biggest.
Category of retail spending and which kind of makes sense because it’s the.
The highest ticket item so 1.5 trillion dollars in in car sales in 2021 which is 23 percent of all retail spending so we said 6.6%.
Six point six trillion in retail 1.5 trillion of it was cars and that’s up as we said earlier 24% from 2019 and then I give you kind of the,
the shape of that Demand right and and you know so again,
the best month in the history of car sales was April of 2021 and then it’s been,
tapering off a little bit since then but still up
significantly from 2020 and 2021 is up nominally from from 2019 so a very vibrant year even though per your point you know
it’s actually hard to get vehicles right so a lot of this this.
Increase in sales is an increase in price points and inflation versus unit sold but I think it is a little bit of both.
Scot:
[23:20] Yeah the other changes there’s a pull forward because what dealers have started doing is pre sailing Vehicles so it’s almost like an auction where they’ll say Jason I know you want this IMA Mustang and we got three coming in and August but if you want one of those I’m going to need you to,
pay me to there now I don’t know how that correlates to these numbers but we’re seeing this big pull forward of the consumer
dollars into the auto category because of this pre-sale thing where,
historically it was you would go test-drive negotiate and then buy the car and it was sitting on the lot the inventory model is kind of flipped right now which is interesting.
Jason:
[23:59] Yeah yeah and I know not not related to sales velocity necessarily but another interesting thing is.
The amount of test drives per sale is way down like it used to be like three test drives per sale and now it might be less than one test drive per sale.
Scot:
[24:17] Yeah it’s kind of it’s fun being in the auto category because some in some ways I feel like I’ve seen the movie before right so for example remember when Zappos came out and they disrupted the shoe category by saying free 365 returns,
well then everyone would just buy would say well sometimes I’m an 11 sometimes in 11 half and 10 half I’ll just order all three in return to.
So then everyone had to adapt that new model because consumers flocked to it
and the car industry carvanha has had a seven day return for a vehicle and that’s how they got around the test drive and everyone laughed at him and was like why would you do that that’s ridiculous and then the pandemic it and everyone had to kind of adopt that model so that’s that’s gotten rid of the test drive most dealers now have had to adapt
to that that more customer friendly model and effectively have like a seven day return window.
Jason:
[25:06] Yeah and you know you’ve heard me say this before but I’ve been following the ottoman of
category relatively closely and the grocery category for two big reasons they’re they’re the two biggest pieces of consumer spending
but also before the Pandemic those were the two categories that were released digitally disrupted like a small percentage of cars were sold online a small percentage of groceries sold online and so those two categories were the most disrupted by digital they they got
the most digital fastest as a result of the pandemic so I’ve been super interesting because
per your point a lot of the learnings that we’ve had over the last 20 years in the apparel industry in the consumer electronics Industry and the home industry like are now
you know playing out in an accelerated basis in the automobile industry and in the grocery industry.
Scot:
[25:57] Yeah 11 cool example and I know you know these guys so yeah I tell folks a lot about how Walmart budget and it was kind of like this this analog kind of old-school company building bringing deep digital DNA and we would see a lot of that not emotive category and sure enough
Discount Tire which is a brick-and-mortar tire shop family-owned what are they like 100 years old or something like that and
they just bought Tire Rec which is kind of the you know the online incumbent and they’re merging those two companies together so
it’s funny because everyone thinks I’m kind of a Nostradamus of this stuff because but it’s really just,
the exact same thing we saw happen in e-commerce with other categories as happening in the automotive category.
Jason:
[26:42] Groundhog Day yeah sometimes when I’m impatient I really have to avoid telling clients so I know you need to figure this out for yourself but I know how it is.
Scot:
[26:52] Yeah.
Jason:
[26:54] But so I mentioned the grocery category that’s the next category that I want to talk about briefly so now we’re on slide 14 of the deck,
and groceries the second biggest category of consumer spending it’s fourteen percent of all retail spending so it’s,
901 billion dollars in 2021 and and I mentioned grocery was up pretty significantly up 16 percent but but that you know that is a little less than the industry average
and I give folks that that same kind of three-year year-over-year graph if they want to see it
but then a bonus data breakdown I always like to do for the grocery industry is on slide 16 and this is a,
a line graph with two data points grocery store sales and restaurant sales,
and what’s interesting about that is for like a pretty significant period of time about a 10-year period.
Sales were split almost 50/50 between restaurants and grocery stores so all the the American calories were kind of divided 50/50 between
McDonald’s on Applebee’s and Walmart and Kroger and in the pandemic exactly what you would expect to happen
grocery sales shot up and restaurant sales you know took a nosedive.
[28:13] Over the course of the pandemic they’ve moved back closer and kind of come summer of 2021 they actually came back to where they used to be so they were kind of level again and we were like I wonder if that,
if if that Gap is over but then Omicron appears to have open that Gap backup
so at the moment there is still about a ten billion dollar a month discrepancy between spending on on groceries and spending on restaurant so
potentially bad news for the restaurants.
Scot:
[28:48] Yeah well you wouldn’t know it at my restaurants or so they’re they’re they’re super busy.
Jason:
[28:53] Nice.
Scot:
[28:55] Could be you know we you know it’s interesting traveling around the country a little bit now it’s like living in 50 different.
Countries the way they’re covid policies are so you go to you go to Florida and Texas and everything’s just open and normal and then you go to the north east or the west coast and things are very much shut down,
and here in our kind of a kind of in the middle but we’re still struggling our restaurants part of it could be that they’re just closing all the time so we have several restaurants that just can’t
keep their doors open due to this kind of constant struggle between in
team members employees and supply chain so you’ll you’ll go and they’ll have to close early because they didn’t have anyone to work that shift and then you’ll go and they’ll be like we’re out of
you know it’ll be a salad place in they’ll be out of lettuce you’re like yeah guess may not have needed open but they’ll be in there with nothing to do so so it’s really.
The economy is having a really hard time it’s really kind of sputtering right now across those things which which could fall into restaurants and bars you know this,
looking into this year into 22.
There’s a lot of grocery stores are have bare shelves and I don’t I was going to actually because you’re the grocery guy I don’t know what’s broken in the supply chain there because obviously we don’t rely on China for you know,
a lot of that stuff so it’s not the that specific thing but that seems to have really become discombobulated as well.
Jason:
[30:21] Yeah so yeah for sure there it turns out like there is for a,
a fair segment of the grocery products there is an international component right like so there are weird ingredients
that we do depend a lot on on Imports for right so you know even if the Mondelez cookies are made in the US the sugar for the Mondelez cookies is not and so it
it is possible for the shipping to to have an impact on Oreo availability it just it tends to be delayed because it’s
it’s more the ingredient than the finished goods that that is getting in.
Scot:
[31:01] Catching you know maybe the package.
Jason:
[31:03] The cpg guys even more so right so a lot of the chemicals that get used in cpg products and a lot of the the,
the packaging like blue ink for a while was one of the the the constraining factors and so you know,
Brands did have a hard decision to make do we like change the color of our packaging so we keep stay on the shelf or do we you know try to stay true to our brand and wait for morning.
Which are not decisions you imagine ever have having to make.
Um and then you know grocery is have its groceries a very fragile ecosystem margins are really thin and so.
More so than other categories of retail the wage inflation has a Major Impact in it it actually.
There’s a low-wage workers all the way along that supply chain and so you know a big thing that takes out.
Domestic food is you know there’s a round of covid at the meat processing plant.
And that that can you know be a big Regional hit I walked into a breakfast place last weekend and they were out of eggs,
and I’m like wait a minute I haven’t heard about an egg shortage or like are we having an egg shortage and the guys I know are our manager just screwed up the hole.
[32:27] Yeah but I was I was with you I guess yeah what it’s questionable why you open if you’re a breakfast,
restaurant and you don’t have any eggs or you should at least put a vegan sign up or something I don’t know.
So I always like to talk about a parallel because for a long time apparel is like one of the crown jewels of the retail category and people are super excited about that and you know there was an ERA when those were the best jobs so up,
Peril is much more it’s about five percent of retail sales it was 303 billion despite the fact that we all have been living in sweatpants for the last two years apparel sales were still up 13%,
that definitely was a mostly due to a 2022 2021 recovery 2020 was a really bad year for apparel and it started to come back so apparel is one of the few categories on Slide,
18 where I give you the three-year graph of the the category it’s one of the few categories where the 2020 sales were consistently below the 2019 sales and then 2021 they,
they came back up to the top and you know one interesting fact about a parallel that I give you a data breakdown on 19 is.
[33:41] Apparel has just been getting cheaper over time that in the 1990s apparel was seven percent of retail spending and now it’s about four and a half percent of retail spending and that’s a largely because
good clothes are just less expensive and and you know the same
closet that an American would have had in 1990 Hassel asks in 2022 and so if you’re growing in the apparel industry
you’re you’re growing in a shrinking Market which is you know always a challenge to do.
Scot:
[34:15] The entire Farm it’s kind of shocking to see April 2020 you know touching effectively zero sales and monthly apparel that’s crazy that I feel for those guys that must have been a scary.
Jason:
[34:28] For most of these graphs I change edit the scale to make the graph as high resolution as possible so the bottom of the graph isn’t zero but in a Peril it absolutely is.
Scot:
[34:38] Yeah might as well be easier yeah.
Jason:
[34:40] Um and so,
so that’s enough of the categories I know a lot of listeners on our show were particularly interested in e-commerce I wanted to talk about e-commerce for a minute I mentioned the official.
Breakdown of e-commerce you know we won’t get for December until the middle of February we do get a,
a kind of proxy for e-commerce which is called non store sales it is a it is a bigger bucket and it has more other stuff in it than just e-commerce but if I look at,
the 11 months of internet data and then the the one month of non store sales data.
It’s pretty clear that we’re going to come in around a trillion dollars in e-commerce sales so if the official numbers work out the way I think this will be the first year the e-commerce in the u.s. is over a trillion dollars.
Um that would represent 16 percent of retail sales so 16 doesn’t sound like a huge number,
but again it just depends on what your denominator is that 16 percent is you know overall of retail which includes,
cars which are getting more digital but still aren’t very digital it includes gas which is you know only digital in a couple neighborhoods in San Francisco,
um and so I you know you start pulling out some of those traditionally non-digital categories and you know.
[36:02] That one trillion dollars represents about you know between 20 and 25% of all the categories that that you know people are willing to buy online and so it’s become a very meaningful mix and obviously.
It was the fastest growing because of the pandemic but inside 21 I show you the the.
The three-year breakdown and the thing that’s unique about e-commerce versus some of these other categories.
[36:32] E-commerce head its monster growth in 2020.
So the two-year growth numbers are still amazing but the one year growth numbers from 2021 to 2020 are not so great because we’re comping against.
[36:46] A monster year and it’s been interesting because like Shopify stock is down because their comps aren’t very good right but really there you know.
They’re comping against these monster numbers.
You know lots of retailers are calling me right now and they’re in a panic because they’re not they didn’t hit their goals and their their you know numbers are wrong and I’m like.
I mean they’re you know their numbers are soft and I’m like well but let’s look at what really happened like you had unprecedented growth over the last two years and you’re you know you potentially are.
Thinking about it in the right way so on slide 22 I give you my,
entire story of the world going digital in one slide and it’s a little hard,
hard to follow but basically what I show you is I show you the brick-and-mortar sales every year or every quarter and then on top of that I show you the e-commerce sales so you can see the e-commerce growing you can see kind of,
as a portion of retail what it is and then I show you the rate of growth for for retail and e-commerce and until the pandemic we had a pretty consistent story,
e-commerce was growing at like between 15 and 20% a year and brick-and-mortar was growing at three to four percent a year and that was pretty reliable,
so then the pandemic happens and brick-and-mortar shrinks for a quarter and e-commerce explodes by you know over 40%.
[38:10] And since that time they’ve been coming back and so for the first time in my life time in Q2 of 2021.
Brick-and-mortar actually grew faster than e-commerce for the first time ever.
Largely because of the you know they’re comping against these these you know huge huge March of 2020
and you know I will see you when the data comes out next month but I have a feeling we’re regressing pretty quickly now back to the kind of the
the pre-pandemic rates of growth like we absorbed all this big e-commerce growth for two years and I can you know I kind of think we’re gonna see e-commerce level back down at that 10 to 15 percent growth every quarter and and Retail drop back down to the 45 percent growth of quarter.
Scot:
[39:06] Well I think it’s you know
I think the silver lining for me is and I’m the e-commerce guy here is we had the Surge and then we actually did kind of even better than the surgeon you know you could have painted a story that said this will kind of flip – for your to as it kind of the subsides and then
then we get back to normal so so the rising tide kind of stuck and created a new high and then we have continued to grow from there
how does I know this this agitates you which is why I bring it up but you know this does not support you know that
Theory out there that we pulled forward like five years of e-commerce.
Jason:
[39:43] Yeah no we we didn’t and most of the evidence now is that.
We’re we’re not even way ahead of where we would have been that like like we we got the sales early but that.
The future growth is.
Slightly slower as a result so that like five or 10 years from now you know will see this this blip on the graph but we’ll kind of you know end up at the same
same place we would have end up without the the pandemic is most people’s projections that’s less to true in some of these,
digitally immature categories like grocery or automobiles where we really did probably pull in you know kind of accelerate two to three years into the future.
And so I did on slide 23 I give you the our estimates of the 2021 e-commerce sales for a bunch of retailers because I’m often surprised people.
Don’t necessarily have.
[40:52] The the best perception about how the relative size of all these retailers so these estimates come from emarketer there there gmv us estimate for Amazon is on the high side of all the estimates I.
I look at but they have 20 21 gmv for Amazon and about three hundred seventy six billion.
Walmart’s the second largest e-commerce site by a lot at 60 billion so quite a bit smarter than Amazon.
Until recently eBay would have been the second biggest site and Walmart’s approaching twice as big as eBay now so they have shot past eBay.
To get to 60 billion eBay’s at 38 billion apple is at 37 billion and then like people people forget how big a player apple is alone I saw a funny stat that like.
If the air buds alone the air pods alone were a company like it would be the 10th largest company.
Scot:
[41:50] Yeah that’s crazy.
Jason:
[41:52] And so then you get like a Home Depot is almost 20 billion targets 8 almost 19 billion Best Buys on you know over 16 billion,
Costco who’s the bane of my existence Costco like pays the least attention to digital they you know always talk about how unimportant digital is and how they don’t like it,
and I tell everyone what a horrible mistake that is and then Costco continues to Excel and despite not trying they sell 14 billion dollars a year on line.
[42:24] So then you can see the rest of the the top 15 on that slide on slide 23 if you’re interested but it’s interesting to understand the.
The relative size of some of these companies.
And so then you know one of the things that people always ask about is what did holiday look like particularly so the next section of this deck is,
a double click on on holiday 2021 and so.
I’m defining holiday as November and December sales that somewhat controversial because there’s a lot of different ways to think about it.
If we just look at November and December sales this holiday period was the the largest retail holiday ever.
And it drew about 16.1%,
which is vastly faster growth than any other holiday like the next biggest holiday was 10% so so kind of the same story for the whole year we get in Holiday it was a monster holiday,
um
You know again that depends a little bit on how you Define retail in RF likes to pull gas out of their number so they’re there they would say holiday was 14 percent growth which is still.
A monster number.
So then I went back to our friends and place Rai and said hey what is foot traffic look like every week of holiday.
[43:49] And that to me was kind of interesting so.
You know December foot traffic was down overall I’ll remind you because of Omicron but if we kind of look at the the weekly data for Holiday foot traffic was actually up versus 2019.
Leading into the Thanksgiving weekend and so then the weekend that was way down was Thanksgiving weekend way less people went to stores on Black Friday,
then went to stores in 2019 about six percent less,
and then you know the rest of holiday was slightly above so if it weren’t for the decline in Black Friday traffic I would say foot traffic and Retail was up about 2%,
over 2019 but that Black Friday dip pulled the whole thing down to where we still aren’t back to 2019 levels does that kind of make sense.
[44:44] And so one of the things that is a common narrative about holiday and I’ve even contributed to this narrative is,
man retailers are really trying to pull sales in and holiday starting earlier in October and you know holidays flattening it’s less about these big,
spikes on on Black Friday and Cyber Monday and so now that we have real data I’m like oh well let’s see how,
how that really held up in the first thing to know is.
The early sales in October was kind of a myth like there was not an unusual spike in sales in October and so you know.
[45:20] There was not a huge success in pulling sales into October and so then what I did is I went to similarweb which similar web has a data set of e-commerce site visits and what I like about that is,
we can get much more accurate granular data than we can on like foot traffic or you know foot traffic or lucky to get weekly data but for e-commerce we can get
daily number of sessions or unique visitors or things like that so I said hey let’s take the hundred biggest e-commerce sites in the US and let’s see total visits and let’s compare,
2019 with 2021 and the first thing to remember is.
You know Thanksgiving doesn’t fall on the same day every year and so what I did is I normalize those I said let’s not do November 1st through December 31st,
let’s do the 25 days before Black Friday in the 32 days after Black Friday so that we could kind of.
Match up the the flow and what you’ll see is there was a lot more traffic on e-commerce sites every day of holiday in 2021 than 20 then 20,
except for two days Black Friday and Cyber Monday and Black Friday and Cyber Monday 2021 with still above.
2019 but they were nearly the same and so.
The I guess what this would say is this partially Bears out our hypothesis.
[46:48] E-commerce visits did level out like the traffic did get spread out to the whole 60 days more than ever before but those those two tent poles are still tent poles and they still are by far the busiest days,
so I you know I definitely you know think that the narrative that like those Temple days don’t matter anymore is kind of a misnomer and they you know they got nearly twice as many visits as a normal holiday day.
Did that surprise you at all.
Scot:
[47:20] The surgeon the chart 21 is interesting at the end I think that’s my procrastinator people.
Jason:
[47:28] So so yeah so.
Scot:
[47:29] It’s where I shop.
Jason:
[47:29] It’s God’s talking about is the gap between 2019 and 2020 is pretty consistent but then opens up the most ever has,
um the very end of the holiday and my hypothesis for that is again this is e-commerce it’s Omicron again so I.
There was pent-up demand to go to stores people were going the store store traffic was going up and then store traffic fell off a cliff
the last half of December as people started getting nervous and so I think that you know drove more people to e-commerce again as my least is my hypothesis.
[48:03] And so so that I think is a super interesting data set I definitely am grateful to have access to the similarweb stuff and wow I was diving into their data Isles
one of the cool things there’s we can see traffic on individual website so I said,
well let’s see who the winners and losers are in terms of traffic and the story here is.
The the traffic is disproportionately going to the the big high-performing sites so you know not surprisingly,
Amazon gets the most traffic but they also got the biggest chunk of traffic growth so sometimes you’d say hey the biggest most established players should be the hardest to grow.
Amazon Druids traffic faster than any other top 10 retailer which is pretty impressive,
and then the next biggest grower was Walmart so this is kind of the story of the rich getting richer and you know traffic and sales consolidating on the,
those those very big a sites which is kind of the story you see on slide 29 if you’re following along on the deck.
Scot:
[49:12] The thing that fascinates me about this data is you have like Etsy with the fourth most traffic but then they’re like one of the smaller e-commerce sites right so does that,
yeah it does that mean no well that’s apples and oranges I guess that’s all of retail in the previous comparison.
Jason:
[49:30] No that was at Seas.
These e-commerce sales are about little less than 8 billion in the u.s. versus like Walmart at 60 billion but then Ed C does have like like nearly as much traffic as Walmart right like.
I want to say they did 600 million,
visits over the holiday period versus Walmart did like 1.1 billion so,
so you know despite Walmart being 10 times as large they only had twice as much traffic and I think part of the reason for that is the the.
Kind of thin long tail nature of Ed c means that their overall conversion rate and the amount of you know pay visits you have to do to find what you want is.
Is higher than then it is on Walmart where you’re more likely to go to Walmart with with high purchase intent for a particular item and these days it’s pretty easy to find that item and get out.
Um and that kind of is born out Ebay is still the second large just traffic site even though they’re they’re shrinking and again eBay’s almost half the size of Walmart but eBay is traffic is still higher than Walmart’s.
Scot:
[50:52] Yeah it’s a huge it’s kind of sad in one way but it’s a huge opportunity Bay could get their act together and convert that traffic the way Walmart is they.
Jason:
[51:00] Yeah if I could redo our.
Our predictions episode so you know I talked about in a number of times on this that one of the big trends is retail media networks and you know people selling ads
what this data set uncovers more than anything else is the untapped opportunities Ed C needs to get a retail media Network up as soon as possible because I,
as far as I know they don’t have one.
So they should be monetizing that traffic because that that that that’s a valuable asset they’re not they’re not leaning into yet for all our Etsy listeners so then I will just say in this is you know the Chrome Legend in me,
during holiday we talk a lot about these
estimates from companies right so Adobe you know you know we have on the show and they give us their real time estimates based on on all the customers they see we have sales force on the show every year and they give us real time estimates
and then you know when we talk about that I don’t think we’ve had on the show is Mastercard has this product called spending pulse which is,
kind of an anonymous aggregated view of all the people that buy stuff with MasterCard and.
[52:08] Just just for interest Adobe MasterCard in Salesforce all agree,
um that the e-commerce grew about 10% in in Holiday 9 or 10% and holiday of 2021
and that passes the smell test again we don’t have the e-commerce data for for December yet so I don’t really know but that.
That feels like the right order magnitude so I think you know these guys all credibly predicted,
the shape of holiday e-commerce but the only one of these guys that predicts brick and mortar is Mastercard right Adobe and Salesforce are pure online retailers and
every year I always get weird data from MasterCard and I say this because the whole.
The whole world and especially the media like publish this MasterCard data far and wide and and treat it as fax MasterCard like on December 26th said that,
retail sales were going to be up 8.5% and that meant they were going to be up 10.7% versus 2019.
And so we now know from the US Department of Commerce data that that they were off by 50%.
So just call out to my friends at MasterCard that I’d be curious to understand what’s going on there from my.
Scot:
[53:31] Your category thing.
Jason:
[53:32] Yeah from my seat Well they argue it’s not but from my seat there consistently off on the brick-and-mortar number so I’m I’m curious and so then.
[53:42] Every time I have this conversation with a colleague or a client the especially someone that maybe doesn’t live and breathe e-commerce every day is soon as you start talking about this monster growth number,
what everyone asks is yeah Jason but how much of that is inflation right because the thing we hear about in the media the most.
Is is inflation inflation inflation and so you know it stands to reason if.
[54:09] You know if something grew by 10% and people are paying more you know ten percent more for everything then that explains it and this you know this is an inflation story not a growth in consumer demand story and so I like to put in.
Just a little kind of inflation picture at the end.
The so I give I give folks a graph of the government,
inflation numbers for for for these three years and and what you can see is that like for most of the pandemic inflation.
Kind of stayed in the normal range and then we started this,
this huge climb not until January of 2021 so if you remember like all a lot of this growth were talking about was 2020 growth,
inflation doesn’t explain that growth at all there is significant inflation in all of 2021 and it’s historically High
it’s you know depending on how you want to count it could be a 40-year high and so it finished in December.
[55:14] At seven percent and so if you figure normal inflation,
is a about 11 and a half percent inflation was already high before the pandemic at 2.3 percent.
You know if you say alright it should have been at 2.3 percent and it’s at seven percent then you could.
Say that the kind of back half of 2021 sales that you know.
That three or four percent of it can be explained by inflation but definitely not this 22% were talking about.
[55:48] And I don’t know if you been thinking about her talking about the inflation a lot it’s kind of.
It’s it’s kind of funny because I always like to remind people the long-term picture we’re all paying way less for goods than we ever did before so I kind of pull this.
This 20-year inflation number to remind people that like we’re paying fifty percent for a pair of what we paid 20 years ago we’re paying,
30% last for personal products and beauty products were paying 17 percent last four cars we’re paying 12% less for food all the tangible stuff we buy is getting cheaper because we’re getting better at making,
and where the American family’s budget is going is to Services right so you know the American families having to pay way less for hard goods and food and way more for housing education and Healthcare and that’s the big macro picture,
but then we’ve had like the we talked about a lot of the growth in retail coming from all this economic stimulus,
the the downside of that economic stimulus is.
[56:47] It actually is one of the contributing factors to inflation right like the people have more money to spend,
um they buy more the supply chain wasn’t prepared for that buy more and so we have,
supply chain disruption and so now you have Supply going down and demand going up and what do people do in a rational Market when they they have high demand and low Supply they they charge more,
um and so then you know people say hey everything I buy is more expensive I need to get paid more and we have this unprecedented leverage that workers have right now
because the labor shortage so they’re all negotiating better prices and guess what that means they can afford.
Pay more again and and manufacturers are you know having more costs of labor for making stuff so they’re charging more and what’s been super interesting and all this is,
you know it’s kind of an excuse for manufacturers to charge you more like most of these manufacturers that are raising their prices are also setting record profits so it’s not like.
True that like.
All of this information is manufacturers passing costs on to Consumers it’s a little bit of the the you know opportunity of the moment of you.
Scot:
[58:01] Yep it’s complicated to the inflation a lot of its gas and then to your point a lot of it’s stuff that doesn’t have this inherent
deflationary element to it like healthcare and we’re paying more and more for healthcare education anything that has a service component is shooting way up.
But even even in the short term though like yeah everything at the grocery store is insane right now it’s crazy.
Jason:
[58:27] Yeah and food and gas are historically more volatile so inflation goes up and down more like side note you have to take all these numbers with a grain of salt because the way they measure it is,
they measure the cost of a basket of goods that an average American bought but they built the basket of goods in like 1945.
And so it’s not the right past it’s for today there’s no iPhone in that basket.
Scot:
[58:50] Yeah.
Jason:
[58:52] So yeah so it’s interesting fun it’s fun for me because I’ll actually be on Good Morning America this weekend talking about inflation.
Yeah always fun but yeah I.
I’m with you if you take what’s called core inflation where you pull gas and food out inflation’s like 4.5% so for most of these retail categories,
it’s part of the story but it definitely would be a mistake to Discount all this growth and say oh it’s just.
And that’s my scoop that’s your 36 slide deck that you’re all welcome to grab and use my thanks to all the the data providers that contributed to all of it so I have a,
a bibliography at the end so if you’re interested in starting to track any of this data on your own I tried to make that easy for you.
Scot:
[59:41] Yeah when we do when we post the show will also try to get on our socials because I’ve had some people say they can’t find the show notes and so we’ll make sure that we disseminate this wide and so everyone has it.
Jason:
[59:55] Well Scott not surprisingly we were able to perfectly fill up an hour with this one topic.
So hopefully you found value in this is Scott mentioned the top of the show if you did we sure would appreciate that five-star review,
but thanks everyone for kind of following Along on this like pretty dry difficult data dump episode I hope I hope it was useful please,
give us feedback if you liked it or if it was not the right format.
Scot:
[1:00:23] People of data in retailgeek delivers and until next time.
Jason:
[1:00:28] Happy commercing!
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