2011 Forecast: Sunny, With a Chance of Recovery

For most e-retailers, the 2010 holiday season was a welcome beam of sunshine after quite a few cloudy months. Our Holiday Shopping Recap showed more than 15% growth in online retail, a positive sign of both economic improvement and consumer confidence

Yet, the question remains: is the improvement here to stay? Is this forecast reliable?

Taking a look at three major categories - US Economic Growth, Consumer Spending, and E-Commerce Penetration - the signs are positive.

On January 14th, the Wall Street Journal reported that major bank economists had raised their 2011 U.S. Gross Domestic Product (GDP) outlook from 3% to 3.3%. This adjustment echoed Fed Chairman Ben Bernanke’s forecast the day prior that recovery was on pace and GDP growth would likely pace between 3% and 4% for the year.

To compliment optimism about macro-economic growth, other industry sources are indicating that the holiday sales spike was the first step in a return of consumer spending habits. The American Express Spending & Saving Tracker data for January indicates that more than 54% of adult American consumers plan to spend the same or more than they did in 2010. The report cited improved consumer saving & financial flexibility as a a major catalyst for a rise in purchases, with “health & fitness” and “clothing” as two of the top three projected spending categories.

Finally, e-commerce sales are poised for accelerated post-2010 growth as a major part of the economic improvement expected for 2011. A JP Morgan study released earlier this month calls for double-digit growth - see below - in the e-commerce market from 2010 to 2013. In addition, consumers continue to buy online with more frequency, with nearly 90% of the population using the web at some point to purchase.

 

































As the 2011 economic forecast calls for optimism, it will be increasingly important for retailers and e-commerce businesses to continue to meet consumer needs online. For December, comScore indicated that aggregate search volume across the major U.S. search engines was up more than 12% from the year prior.

All of the indicators are aligned, pointing to a far better atmosphere than what most retailers have experienced for many months. With a brighter forecast on the horizon, it’s time to enjoy the “weather” and make your presence known to the world around.


Posted by Jon Sadow, Google Retail Team