Instead, consumers seem to have gotten tired of ordering everything from their couch and are back to shopping the old fashioned way.
“As the pandemic has subsided, you are seeing consumers returning to their pre-pandemic activities,” said Brian Nagel, who oversees the retail sector at Oppenheimer & Co. “Consumers see the benefits of shopping in stores.”
Several factors are converging to slow the growth of online sales, he said.
Inflation puts pressure on consumer wallets. This has led some shoppers to ditch high-priced discretionary items like electronics and furniture — items often bought online — or waive shipping fees.
Other consumers have shown a desire to get out and socialize after being locked down at home during the pandemic.
“Shopping in stores is a social activity,” Nagel said.
Signs of this shift in consumer preferences are everywhere.
In May, online retail sales rose 2.2% from the same month last year, according to payment data released by Mastercard on Tuesday. Sales in stores grew much faster – by 13.4%.
E-commerce stocks were the worst retail sector in the S&P 500 in 2022, down 28% as of Monday, according to S&P Global.
According to experts, new layoffs are coming.
“Many of these companies are hiring in anticipation of projected growth,” said Berna Barshai, an analyst at Empire Financial Research. “Now they will not justify these forecasts. The obvious response to unmet growth targets is to scale down, cut costs, and cut costs.”
The trend represents a dramatic reversal in the drive for online ordering during the early stages of the pandemic. This has overturned predictions that the consumer shift to online shopping will be permanent.
Two years ago, when Covid-19 brought daily life to a standstill, online shopping surged.
With non-essential store closures and take-out orders, shoppers of all ages have been shopping for groceries, home goods, furniture, sports equipment and other items online in record numbers – some for the first time.
The companies increased their workforce to meet demand, expanded their distribution capacity and partnered with delivery services such as Instacart and DoorDash.
But when businesses reopened in the summer and fall of 2020, the process began to reverse. Consumers rushed to malls to tidy up their wardrobes and make long-awaited purchases.
Online sales still make up a larger portion of retail sales than before the pandemic. But they are steadily declining from their spring 2020 peak.
Leading companies say they are seeing more shoppers returning to stores.
Jennett said shoppers came to the stores to buy formal wear, such as dresses for parties and social events. At the same time, they have given up on buying everyday clothes online.