This year next year: ecommerce and retail media

How investment in retail has changed through the pandemic and how it’s finding a place in a world of in-person activity

The smart money for 2022’s Word of the Year may very well be on ‘hybrid’. It encompasses so much of our current multi-front transformation where we are neither back to old forms of communication, energy, shopping and working, yet neither are we fully green, virtual or automated.

We live in a world of hybrid working, hybrid cars and hybrid shopping behaviours. Retailers who rolled out or invested in ecommerce capabilities during the pandemic (2020’s Word of the Year), are continuing to target ever greater ratios of ecommerce sales. Yet the trend line isn’t simply "up and to the right". Some physical shopping has returned in markets with high production and adoption figures for COVID-19 vaccine (2021’s Word of the Year).

This year, the underlying digitisation of trends have been complicated by ongoing supply chain disruptions (and the resulting call for de-globalisation), soaring inflation and decelerating retail sales. China has reduced its economic growth estimates for the year amid strict and long-lasting COVID-19 containment strategies, and a range of other economic and financial risks.

The UK, which saw a massive leap in ecommerce sales, as well as digital advertising revenue throughout the pandemic, is now facing double-digit inflation and rising power and heating costs, with the lowest income households disproportionately affected. However, it’s not a foregone conclusion that we’re headed for a widespread and deep recession. To understand where consumer spending, retailers and advertisers are likely to go from here, we can study the largest markets and companies providing data.

GroupM’s analysis found that:

• Global ecommerce will make up 19% of global retail sales in 2022, growing up to 25% by 2027
• Twenty of the top global ecommerce companies accounted for 67% of global ecommerce sales in 2021
• Global retail media is likely to reach $101 billion in 2022 (15% higher than a year ago) and will hit $160 billion in annual revenue in five years’ time
• The high-water mark for advertising revenue today equates to approximately 5% of GMV, which under the right circumstances could be a reasonable target for others who presently fall somewhere between 0% and 3% today
• Over the next one to three years, retail media will likely see greater competition, more frequent decoupling of data from inventory and greater participation by non-economic brands

For more in-depth insights and analysis download GroupM’s This Year Next Year: 2022 Ecommerce and Retail Media Forecast