During every economic cycle there is someone who wants to claim that some particular element of the cycle is “different this time”. The implication of this statement is that the lessons we have learned in the past no longer apply. Every time the phrase comes up, a sage investor will smugly respond, “it’s not different this time”. In the aggregate, economies see booms and busts, but technology and innovation can leave lasting effects. As we’re scanning the landscape for new consumer behaviors, there is one that sticks out and it should not surprise us. E-commerce took a huge step forward during the pandemic because consumers were forced into it by quarantines and fear. Sounds awful, unless the leaders of your business were smart enough to invest heavily in e-commerce before the pandemic began.
According to CoStar, on-line retail spending increased more than tenfold when households began stockpiling necessities in 2020. Naturally that rate was not sustainable and more experiential activities took back some consumer wallet share. However, on-line sales went on to hit new highs in 2022 and we shouldn’t expect them to turn around anytime soon. Two things have changed and we need to recognize them: 1. The consumer got comfortable ordering on-line. 2. The Millennials grew up. Millennials are the largest generation we have seen since the Baby Boomer generation, and they have grown up very comfortable with the use of technology. As the middle-aged population is set to grow for the first time since the mid-2000’s, they will have the technological savvy and discretionary income. It is different this time.