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For the first time, US ecommerce spending is likely set to surpass $1 trillion in 2022, according to the Adobe Digital Economy Index.
If it is reached, this milestone would be marked after two years in which ecommerce spending surged in the pandemic, data released Tuesday at the Adobe Summit show. Just take a look at the figures from March 2020-February 2022:
- U.S. consumers spent $1.7 trillion on ecommerce purchases.
- That's $609 billion more than the two-year period prior to the pandemic.
- In 2021, American consumers spent $885 billion in online purchases, which was up 8.9% year-over-year from 2020.
When it comes to what consumers bought, most of the growth was attributed to the following three categories:
- Grocerygrew the most as food shopping moved online. With wider adoption of curbside pickup and more instant delivery options, the category now accounts for 8.9% of ecommerce spending overall. That's up from 6.3% pre-pandemic.
- Consumer electronicswas the largest category in ecommerce before the pandemic, and only grew over the two years in which many conducted most of their business and personal life at home. Electronics now account for 18.6% of ecommerce spending overall. with an 8% year-over-year increase in 2021.
- Apparelremained the second-largest category behind electronics, with 14.3% share. But the gap has widened. Adobe noted growth of 9% and 8% year-over-year for the category in 2020 and 2021, respectively.
“Ecommerce is being reshaped by grocery shopping, a category with minimal discounting compared to legacy categories like electronics and apparel,” Patrick Brown, vice president of growth marketing and insights at Adobe, said in a statement. “It highlights a shift in the digital economy, where speed and convenience are becoming just as important as cost savings.”
Adobe forecasts $1 trillion in US ecommerce spending in 2022.(Image courtesy of Adobe)
While there was plenty of growth to report, the data also showed the effects of challenges that emerged in the tumultuous pandemic economy.
- Inflation:Of the $1.7 trillion spent, Adobe stated that consumers paid $32 billion more for the same amount of goods.
- Supply chain: The rising demand for ecommerce ran headlong into supply chain issues that resulted from shortages of labor and materials. That led the chance that a consumer sees an out-of-stock message to rise 235% from pre-pandemic levels over the last two years.
- Demand, however, is still rising. In the first two months of 2022, the data show a 13.8% year-over-year increase in ecommerce spend.
Trending in Economy
Campbell Soup Company CEO Mark Clouse offered thoughts on messaging amid inflationary shifts in consumer behavior.
After months of elevated inflation and interest rate hikes that have the potential to cool demand, consumers are showing more signs of shifting behavior.
It’s showing up in retail sales data, but there’s also evidence in the observations of the brands responsible for grocery store staples.
The latest example came this week from Campbell Soup Company. CEO Mark Clouse told analysts that the consumer continues to be “resilient” despite continued price increases on food, but found that “consumers are beginning to feel that pressure” as time goes on.
This shows up in the categories they are buying. Overall, Clouse said Campbell sees a shift toward shelf-stable items, and away from more expensive prepared foods.
There is also change in when they make purchases. People are buying more at the beginning of the month. That’s because they are stretching paychecks as long as possible.
These shifts change how the company is communicating with consumers.
Clouse said the changes in behavior are an opportunity to “focus on value within our messaging without necessarily having to chase pricing all the way down.”
“No question that it's important that we protect affordability and that we make that relevant in the categories that we're in," Clouse said. "But I also think there's a lot of ways to frame value in different ways, right?”
A meal cooked with condensed soup may be cheaper than picking up a frozen item or ordering out. Consumers just need a reminder. Even within Campbell’s own portfolio, the company can elevate brands that have more value now, even if they may not always get the limelight.
The open question is whether the shift in behavior will begin to show up in the results of the companies that have raised prices. Campbell’s overall net sales grew 5% for the quarter ended April 30, while gross profit margins held steady around 30%. But the category-level results were more uneven. U.S. soup sales declined 11%, though the company said that was owed to comparisons with the quarter when supply chains reopened a year ago and expressed confidence that the category is seeing a longer-term resurgence as more people cook at home following the pandemic. Snacks, which includes Goldfish and Pepperidge Farm, were up 12% And while net sales increased overall, the amount of products people are buying is declining. Volumes were down 7%.
These are trends happening across the grocery store. Campbell is continuing to compete. It is leading with iconic brands, and a host of different ways to consume them. It is following that up with innovation that makes the products stand out. Then, it is driving home messaging that shows consumers how to fit the products into their lives, and even their tightening spending plans.
Campbell Soup is more than 150 years old, and has seen plenty of difficult economic environments. It is also a different business today, and will continue to evolve. At the end of the day, continued execution is what’s required.
“If it's good food, people are going to buy it, especially if it's a great value,” Clouse said.