Is E-Commerce the Shopping Center Industry’s Friend or Foe?
May 2, 2011 11:41 AM, By David Lynn, NREI Contributing Columnist
The introduction of the Internet, e-commerce and other online platforms has undeniably caused a revolution in the retail world. Consumers’ comfort and savvy with the Internet has increased dramatically over the last decade. The percentage of people identifying themselves as Internet users increased from roughly half of the U.S. population in 2000 to approximately 80% in 2008.
It is notable that right on the cusp of this phenomenon is the enormous population wave of Echo Boomers, a cohort approximately equal in size to the Baby Boomers. These were the first young people to have access to computers, Internet and mobile communications technology throughout high school, which clearly has had a significant impact on their shopping behavior.
A revolution, not evolution
Perhaps even more significant than the number of people described as “Internet users” is the introduction of high-speed Internet access in homes and offices, which effectively ushered in the era of online shopping. Broadband, digital subscriber line (DSL) and other forms of high-speed service have enabled the Internet to become an effective retailing channel.
In 2002, 10% to 20% of U.S. households in the 10 largest metropolitan statistical areas (MSAs) used broadband at home. By 2007, 50% to 80% of households were using broadband at home. This trend represents a sea change in the number of people with the means to efficiently shop online at home. These customers also have a virtually instant and unlimited source of product and pricing information, and exponentially greater buying options.
With the growth of broadband access, e-commerce has naturally taken a greater share of overall retail. E-commerce sales have increased every year since the beginning of the decade with an average growth of 20% per year since 2001, creating a $143 billion industry in 2009.
Despite this growth, e-commerce accounts for only 4.2% of the total retail industry as of the third quarter of 2010, according to the U.S. Census Bureau.
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