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E-commerce will make up 20% of US retail sales by 2022, UBS says

Online share of U.S. retail sales is expected to rise from 13% in 2018 to 20% by 2022, investment firm UBS said in a Dec. 19 report.

The firm, however, believes the growth in e-commerce over the next five years is not expected to induce an "apocalypse" for brick-and-mortar retailers because consumers still desire to "see and feel" products before buying them.

Lower prices, better selection and convenience are the key factors expected to drive the growth of online sales, in addition to the behavioral pattern of younger consumers who will eventually buy a greater share of goods online as they age. The study conducted by the investment bank found that younger people are almost twice as likely to shop online as older people.

Interestingly, even if online sales rise at a 12% annual rate, brick-and-mortar stores still have a potential of attaining a 1% annual growth assuming overall U.S. retail sales grow at 3%, the study estimates. Under these conditions, the study does not anticipate a "retail apocalypse" but expects 2% annual store closures over the next five years. Traditional retailers are "positioning themselves to win online" and are taking advantage of "their scale, high brand awareness, and store bases to create defendable marketplace niches," the report added.

Grocery, home improvement and other similar categories previously considered to be "undisruptable" by e-commerce are likely to experience some online growth over the next five years, UBS predicts. Online grocery share is expected to rise to 7% in 2022 from 2% in 2018, while home improvement online sales might jump to 9% in 2022 from 4% in 2017.

UBS predicts that Inc., Target Corp., Nordstrom Inc., The Estée Lauder Cos. Inc. and Hasbro Inc. are better-positioned for e-commerce's impact than the market perceives. On the other hand, The TJX Cos. Inc. and Kellogg Co. are expected to be more negatively impacted by e-commerce than the market anticipates.