The (at least) $4 trillion dollar question. We address what is arguably the most important consumer stock debate of any period: what percentage of retail sales will ultimately move online?
The $4T question...how much of US Retail sales will move online?
The answer will materially affect hundreds of US stocks worth over $4T - and may offer a template for how eCommerce penetration evolves globally. To answer it, UBS built an interactive eCommerce penetration model based on 5 years of proprietary survey data from UBS Evidence Lab.
Online penetration will likely increase.
Online channels often offer better selection and convenience, as well as lower prices. Plus, younger people are almost twice as likely to purchase online vs. older Americans. We think as today's young people age and buy a greater share of goods, online penetration will increase.
Surprisingly, eCommerce gains do not signal "the death of stores".
Our work suggests stores can still deliver 1% annual growth, assuming overall US retail sales grow at 3%. There are two key points from the survey: first, 40% of shoppers still express a strong desire to see and feel products in store before purchasing them; second, most Americans also appreciate the "instant gratification" of store shopping. These are barriers that eCommerce is struggling to overcome.