Up to this point, digitally-savvy millennials have propelled much of the growth in online spending. Yet a new report suggests that as the group’s influence spreads, a broader majority of shoppers could be on the verge of mimicking their habits, thereby fueling a sustained period of online sales growth.
According to the research, released Thursday by Goldman Sachs, older millennials (ages 25 to 34) are more likely than any other generation to spend most of their clothing budget online. Separate data collected by the firm over time has found the online spending habits of 35- to 44-year-olds have lagged this group by about one to two years, with those between ages 45 and 54 straggling another two or three years.
Given that Goldman pegs the acceleration in millennials’ digital adoption to late 2014, the firm predicts that U.S. apparel and accessories sales growth will increase by a steady 20 percent over the next four years. That compares to gains of less than 10 percent just six years ago.
“This means an additional $50 billion of sales will migrate online over the next four years, a revenue base equivalent to apparel and accessories sales for Macy’s, Nordstrom and Kohl’s in all channels combined,” the report said. “At that rate, online penetration of the apparel and accessories category will reach 25 percent in four years, with further adoption across the age and income spectrum.”
Goldman’s report comes one day after a separate study by UPS and comScore found that for the first time in its five-year history, “avid” online shoppers — who make two or more purchases online in a typical three-month period — completed more than half of their purchases on the web during that timeframe.
According to Goldman’s research, nearly 35 percent of millennials already spend most of their apparel budget online. That compares to roughly 30 percent for those between ages 35 and 44, and closer to 15 percent for those between 45 and 54.
Similarly, UPS found that millennials complete on average 54 percent of their purchases online. That compares to 49 percent for non-millennials.
Young adults are also spending more on their smartphones than their older counterparts, UPS found. Whereas 63 percent of millennials said they’ve bought an item on their smartphone, only 41 percent of Gen Xers and 19 percent of baby boomers said they’ve done the same. This growth is notable given mobile’s robust revenue gains during the latest winter holiday season.
Yet millennials aren’t the only variable expected to power the next phase of online apparel shopping. Goldman also lists the influence of affluent consumers; improvements in digital technology; and, of course,Amazon‘s expansion into this category as likely contributors.
Indeed, online sales trends have slowed at many traditional retailers, with Forrester saying earlier this year that Amazon’s domestic retail business accounted for some 60 percent of overall digital revenue growth between 2014 and 2015.
To be sure, apparel is the leading category for overall online spending, according to comScore. But Goldman’s research underscores that even as online shopping matures, making way for fewer new adopters, consumers are allocating more of their money toward the web.
According to the Commerce Department, online sales increased 14.6 percent in 2015, compared to growth of 26 percent a decade earlier. Even as the web steals sales from physical stores, it still accounts for less than 10 percent of overall retail spending, according to the government data.