Frost & Sullivan: Retail industry to shift to online channels

July 9, 2013

New analysis from Frost & Sullivan and its Visionary Innovation Research Growth Partnership Service program Bricks and Clicks suggests that online retail revenues will reach $4.3 trillion in 2025, accounting for nearly 20 percent of total retail. In leading markets like the U.S. and the U.K., nearly 25 percent of retail will be online.

The media and entertainment segment will witness the highest online sales penetration (82 percent) by 2025, especially with the advent of platforms such as iTunes, e-readers, and Netflix resulting in a huge shift to digital, according to the report.

"The proliferation of connected devices and the availability of faster Internet speeds have catalyzed a change in shopping behavior and fuelled market expansion," said Frost & Sullivan Visionary Innovation Research Group Analyst Archana Vidyasekar. "Innovative business-to-consumer logistic models and the growing influence of social media, along with the convenience of online product research, comparison shopping and competitive pricing, have helped convert many online browsers to online shoppers."

The virtual store will also become more common, according to the report. Retail giants such as Tesco have found success with virtual stores in countries like South Korea. Tesco's online sales increased by 130 percent within months of the launch of its virtual store home shopping app, which is also the most downloaded app in Korea.

"Virtual stores are being introduced in transit zones such as subways or airports and as virtual posters on buses and stalls, highlighting its importance to the future of global retailing," said Vidyasekar. "As similar on-the-go shopping models rapidly become popular, traditional credit cards and paper currency will give way to more convenient, easily available mobile payment channels."

Read more about online retailing.

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