Direct retailers sold more than $26 million worth of merchandise in July, enough for a healthy growth rate over last year, thanks to strong online sales. However, there are signs that shopper fatigue is hurting direct merchants, many of which had held up better than competitors during the recession.
According to the latest Commerce Department retail sales statistics, July sales among non-store retailers — a segment made up mostly of online shopping sites and mail-order houses — were up 12.6% year over year, but only 0.2% from the month before. For the year to date, sales by the group are running 12.4% ahead of last year, with $195.7 million in total.
“The comparisons are starting to become tougher after a few years of explosive growth,” said Brian Sozzi, retail analyst at Wall Street Strategies. “Online sales continued to show nice gains when economic conditions were at their worst. Consumers were able to find better prices than at brick and mortar [stores].”
Online sales had been a bright spot among Commerce Department numbers throughout the recession, often posting double-digit percentage growth and healthy month-over-month gains. But even if e-commerce retreats to a more pedestrian growth rate, it doesn’t mean online retailing is mature, said experts. They note e-commerce is still in a growth cycle, fueled by increased adoption of broadband Internet and more secure payment.
“Although we are seeing relatively ‘poor’ growth for this month, the online segment is still outperforming the broader retail segment as a whole when you look at a slightly longer trend,” said Toon van Beeck, senior analyst at research firm IBISWorld. Its analysts have forecasted that online shopping will grow by 7.8% this year.