U.S. Offline Spending: What’s the Real Number?
October 2, 2019 | Contributed by: Mike Boland
Data Scout is LSA’s series that curates and draws meaning from third-party data. Running semi-weekly, it adds an analytical layer to the industry data that we encounter in daily knowledge building. For LSA original data, see the separate Modern Commerce Monitor™️ series.
One of the most referenced data points in the world of local media and commerce is the share of consumer retail spending that happens offline versus eCommerce (example). It’s an important stat as a reminder that media attention to eCommerce is disproportionate to spending… and that retail ain’t dead.
But the figure is often stated in general terms or hovers around 90 percent without citation. So as our latest act of service journalism, we want to provide a closer look at the current offline retail spending figures and their sources. And it’s not just offline spending, but the subset that’s influenced online (O2O).
Starting with the offline retail spending share, our perennial go-to source for this moving target is the U.S. Census Bureau’s quarterly tracker (latest here). Y Charts has a rendition of this chart that we’ve bookmarked for ongoing reference, as it updates automatically. You can see or bookmark that here.
As for the figure itself, 10.7 percent of U.S. retail spending is eCommerce. Rounding to 11 percent for cleaner citation gives us 89 percent of U.S. retail spending that’s done offline. That means the ongoing “90+percent” references aren’t too far off. More importantly, now you have a source to use.
As a failsafe, another source is eMarketer, which appears to be pulling from the Census Bureau (as it tends to do), or it’s coincidentally the same figure. We’re offering that alternative below because it breaks down some of the eCommerce spending sources (mobile, desktop etc.) and it’s a better-looking chart.
To be clear, what we’re talking about here is consumer spending on physical goods. It includes typical retail but also categories like food services (restaurants) and other spending categories like movie theaters. So it includes the gas you put in your car but not the labor cost associated with getting your oil changed.
But perhaps more important than spending shares is the absolute dollar amounts. As indicated in the eMarketer chart (and deeper in the Census Bureau report), total annual U.S. retail spending will be $5.47 trillion this year. The offline portion of that weighs in at $4.89 trillion while eCommerce is $587 billion.
But what about the portion that’s influenced online, otherwise known as online-to-offline spending (O2O). This is a key figure to underscores the need for marketing and attribution built for that specific purchase path. The data here aren’t as easy to find, but Delloite has a decent (though somewhat dated) stat.
The firm pegs digitally-influenced offline retail spending at $1.7 trillion, $.97 trillion of which is mobile. This needs to be taken with a grain of salt because it’s a 2014 figure, but it can be directionally relevant to get a sense of spending shares. Out of a total $3.7 retail spending at that time, O2O was 46 percent.
If we were to adjust that to 50 percent, given moderate/mature growth in mobile activity, then apply it to today’s offline retail total of $4.89 trillion, we’d get an O2O spending estimate of $2.445 trillion. That last part is more of a thought exercise than an official figure, but hopefully valuable for perspective.
We’ll keep tracking this moving target for strategic implications. Though offline retail has a sizable lead, it’s inching downward. eCommerce year over year growth is 13.3 percent according to the U.S. Census Bureau report, while the corresponding figure for the more mature overall retail segment is 3.2 percent.
It looks like industry commentary is going to have to get used to referencing brick & mortar’s share of retail spending in a way that starts with an 8, and not a 9.
Be the first to hear news about Local, events, and research. Click here to subscribe for updates from the LSA.