2020’s Biggest US Forecasting Shocks

NOV 2020Ethan Cramer-Flood

A Year of Recalculations Brought About by COVID-19

Copyright © 2020, Insider Intelligence Inc. All rights reserved. Page 2

2020’s Biggest US Forecasting Shocks: A Year of Recalculations Brought About by COVID-19

Throughout 2020, we reevaluated many of our forecasts to produce more accurate projections that accounted for the pandemic. Examining the difference between what we thought in February 2020 vs. what we think now reveals an intriguing new set of metrics.

Which of our US forecasts shifted the most in absolute terms?

Retail ecommerce sales: Our forecast shifted up by $119.62 billion, now reaching $794.50 billion in 2020 instead of $674.88 billion as originally forecast prior to the pandemic. On the flip side, our US brick-and-mortar (or non-ecommerce) retail sales forecast is now $234.50 billion less than it was before the pandemic, declining from $4.946 trillion to $4.711 trillion. US retail is so large that any shifts within it dwarf our other forecasts in absolute terms.

Which digital services will see the most unexpected increases in US users?

We now forecast that 189.0 million US adults will participate in digital banking this year, an unexpected additional uptick of 22.8 million people compared with our pre-pandemic forecast. Similarly, TikTok will gain an additional 20.5 million US users compared with our first projection, and our US mobile proximity payment users forecast is 17.6 million users higher than expected.

Which digital time spent forecasts increased the most dramatically between the earlier estimates and the latest estimates?

Adults in the US will spend an average of 64 more minutes with media per day in 2020 than we thought they would. Within this, users will spend almost 26 additional minutes per day on their smartphones compared with our earlier expectations. Also, nearly 20 extra minutes per day will be spent with subscription over-the-top (OTT) services like Netflix and Disney+.

WHAT’S IN THIS REPORT? Included are highlights of those US forecasts that we revised most significantly due to COVID-19. Nearly every forecast we produce was affected, but some significantly more than others.

minutes per day and % change, 2020 & 2021

How Has Our Forecast for Average Time Spent withSubscription OTT Services Among US Adult PopulationChanged?

2020

43(10.7%)

62(23.0%)

2021

46(7.4%)

67(7.3%)

Nov 2019 forecast April 2020 forecast

Note: ages 18+; includes all desktop/laptop, mobile and other nonmobileconnected-device time watching video on subscription OTT platforms; timespent with each medium includes all time spent with that medium,regardless of multitasking; for example, 1 hour of multitasking ondesktop/laptop while watching TV is counted as 1 hour for TV and 1 hourfor desktop/laptopSource: eMarketer, April 2020260630 www.eMarketer.com

KEY STAT: Pre-pandemic, we thought US adults would spend an average of 43 minutes per day in 2020 watching subscription OTT services. Post-outbreak, we revised that forecast up to 62 minutes per day, a growth rate of 23.0% over 2019.

Contents

2 2020’s Biggest US Forecasting Shocks

3 The US Forecasts Most Heavily Disrupted by COVID-19

7 Selected Highlights of Our Biggest Forecasting Changes

7 Digital Users

8 Time Spent with Digital

9 Ad Spending

11 Ecommerce and Overall Commerce

12 Key Takeaways

12 Read Next

Copyright © 2020, Insider Intelligence Inc. All rights reserved. Page 3

The US Forecasts Most Heavily Disrupted by COVID-19

Insider Intelligence and its eMarketer team generate roughly 1,500 forecasts on digital transformation topics every year. These estimates are mainly produced on an annual basis, with several of the highest-profile metrics reassessed one additional time during the year. However, given the extraordinary socioeconomic disruptions of 2020, we undertook an unprecedented effort to recalculate huge swaths of our pre-pandemic forecasting to generate more accurate projections that accounted for the pandemic. Valuable insights can be gleaned by examining the difference between what we thought would happen as of February 2020 vs. what we now project for this year and the coming years.

The following report collects and describes those forecasts that reveal the most significant gaps between what would have happened in a “normal” 2020 compared with our coronavirus-afflicted reality. Nearly every forecast we produce was affected by the pandemic, but some significantly more than others. The forecast data points listed in the following sections are those that changed by the largest magnitudes: unexpected digital usage shifts by tens of millions of people, spending projection increases or decreases by tens of billions of dollars, etc.

In compiling the list of forecasts that saw the steepest fluctuations, three key trends emerged. These themes provide a framework for understanding the wider impact of the pandemic on the digital marketplace.

1. Social Distancing Generates Winners and Losers The unprecedented social and economic disruptions that affected all areas of life in the US in 2020 also skewed many of our pre-pandemic forecasts.

Due to widespread commercial lockdowns and quarantine-related personal restrictions, US consumers overwhelmingly reduced spending on services and entertainment this year (restaurants, bars, salons, travel, events, education, etc.). This in turn led to an unexpectedly strong outcome for spending on retail goods, as households used the suddenly available cash to splurge on consumer electronics, home furnishings, digital groceries, and a range of other products.

Despite a strained economy, high unemployment figures, and extended recessionary conditions, retail spending unexpectedly held up, thanks mainly to devastating declines in the services sector.

The physical reality of social distancing requirements created analogous outcomes across a range of other pairings:

■ Sales of indoor-oriented goods and services spiked, while sales of goods and services used outside the home collapsed.

■ Ecommerce retailers set records, while some brick-and-mortar retailers went bankrupt.

■ Entertainment services that could be accessed at home had a banner year, while out-of-home (OOH) entertainment revenues cratered.

■ Demand for essential goods boomed, while demand for some discretionary products wobbled.

Consumer behavior followed suit: Digital adoption and/or time spent unexpectedly spiked for services like digital video, OTT subscriptions, messaging apps, health and fitness apps, and anything else users could enjoy at home. Meanwhile, digital services related to OOH activities, such as much of the sharing economy, saw usage dip significantly.

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BOOM BUST

Time Spent

Digital Users

Ecommerce & Retail

Ad Spending

Boom and BustHere are some of the US forecasts that got a surprise boost in 2020 because of COVID-19 and some that declined unexpectedly. These numbers reflect how much our forecasts changed when we reevaluated after March.

AD

AD

Subscription OTT +19.75 minutes

Smartphones +25.80 minutes

Digital Travel Bookers -16.2M users

No digital activity will see a significant unexpected decline in time spent in 2020 because of COVID-19.

No digital advertising category will see a significant unexpected increase in spending in 2020 because of COVID-19.

Sharing Economy-32.6M users

Digital Video+13.26 minutes

Messaging Apps+10.80 minutes

Food & Beverage Ecommerce+$13.30B

Consumer Electronics Ecommerce +$29.30B

Furniture/Home Furnishings Ecommerce +$15.50B

Click and Collect+$7.86B

TikTok+20.5M users

Health & Fitness Apps +15.1M users

Mobile Proximity Payments+17.6M users

Brick-and-Mortar -$234.50B

Total Apparel-$88.51B

Search-$4.70B

Display -$6.85B

TV-$12.00B

Source: Insider Intelligence, November 2020

Copyright © 2020, Insider Intelligence Inc. All rights reserved. Page 5

A stark division between those categories that benefitted from the new realities created by the pandemic and those categories that were harmed is apparent across nearly every topic area we cover. The numerical gap between our pre-pandemic forecast and current forecast demonstrates how much the losing side missed out.

2. Digital Transformation Is AcceleratingThe second major thematic trend to emerge from our observations is the extent to which unexpectedly rapid digital transformation accelerated various disruptions that were already underway. This manifested in four ways:

■ Ecommerce pure plays had an early moment in the sun in 2020, while more traditional retailers scrambled to update their multichannel digital game plans. The legacy players that proved to be nimble digital adopters were able to salvage strong sales figures this year, whereas slow-to-evolve companies may have hastened their exit from the marketplace.

■ The existing dominant ecommerce players were able to cement their status at the top of the food chain. The share of ecommerce controlled by the top 10 online retailers will jump this year, from 57.9% to 63.2%, while lesser-known digital players will fall further behind.

■ Digital ad spending held the line to a much greater extent than any category of traditional ad spending—to the great benefit of digital ad publishers. Traditional advertising on TV, radio, and print had already been struggling, but in 2020 ad spending in these channels took a nosedive compared with our pre-pandemic expectations. Digital ad spending did not have a great year either, but ad spending driven by the ecommerce explosion opened the door for digital ad publishers to stay above water.

■ Finally, digital transformation in the financial services industry took a huge leap forward thanks to the necessities of social distancing. Any product or service that made it easier for consumers to manage their finances or handle transactions at a distance saw an unexpected boost this year. This trend was already underway, but usage in 2020 will show increases that far surpass what we expected at the beginning of the year.

3. Some Shifts Are Permanent, Others Are Short Term The last major observation that illuminates how COVID-19 changed our forecasts is the way in which some of the disruptions we have identified will prove to be short term, whereas others will be long lasting.

Copyright © 2020, Insider Intelligence Inc. All rights reserved. Page 6

Short-TermDisruption

Long-TermShift

Subscription OTT

Smartphones

Digital Travel Bookers

Sharing Economy

Digital Video

Messaging Apps

Food & Beverage Ecommerce

Consumer Electronics EcommerceFurniture/Home Furnishings Ecommerce

Click and Collect

TikTok

Health & Fitness Apps

Mobile Proximity Payments

Brick-and-Mortar

Total Apparel

Search

Display

TV

The New Normal?

Time Spent

Digital Users

Ecommerce & Retail

Ad Spending

AD

AD

Source: Insider Intelligence, November 2020

For some of our US forecasts, COVID-19 shifted long-term trends permanently. For others, the distortions will be temporary.

Copyright © 2020, Insider Intelligence Inc. All rights reserved. Page 7

Our differentiation between a “short-term” and a “long-term” disruption is simple: We examined the pre-pandemic forecast and the revised forecast—then asked if the primary metric would, within a few years, return to where it would have been even if COVID-19 had never existed. If the answer was yes, then the 2020 disruption would be deemed a short-term phenomenon. However, if the metric never returned to its earlier trend line in our new forecast, then the shift would be considered long term.

Selected Highlights of Our Biggest Forecasting Changes

Our four thematic forecasting buckets are comprised of two digital usage categories (digital users and time spent on digital) and two digital spending categories (digital advertising and ecommerce). Where it makes sense to do so, we also cover traditional nondigital metrics in these buckets, such as TV ad spending and usage and spending on traditional non-ecommerce retail. Under these umbrellas, we assess and project more than a thousand industry-level, product-level, and consumer-behavior-oriented metrics.

What follows is a highlight-reel glimpse at the data points within these categories that changed the most dramatically in our 2020 forecasts between February and November of this year.

Digital Users

This year saw US consumers flock to digital devices and screens at rates far faster than anticipated, as users sought out new ways to kill time, keep up with the news, stay entertained, and avoid close contact with those outside their households. On the flipside, the portion of the digital economy dedicated to moving people around (travel and the sharing economy) suffered mightily.

The BoomsThese digital user forecasts showed the biggest positive shifts compared with our pre-pandemic estimates:

■ Digital Banking Users. Before the coronavirus, we expected that there would be 166.2 million adult digital banking users in the US in 2020. Now we project that there will be 189.0 million, an increase of 22.8 million from our earlier expectation. A desire to avoid in-person interactions at physical banking facilities is the clear explanation for this massive uptick.

■ TikTok Users. TikTok’s explosive popularity during the US lockdown period was well documented. Previously, we anticipated TikTok would have 45.4 million users in the US this year, but now we expect that figure to be 65.9 million, which amounts to 20.5 million unexpected new users. TikTok’s future in the US remains cloudy, however, because it collects huge quantities of data on US citizens and its parent company, ByteDance, is subject to Chinese government control. Whether or not TikTok will eventually be banned in the US remains an open question.

■ Proximity Mobile Payment Users. The number of people in the US using their smartphone to conduct point-of-sale (POS) transactions will increase by 17.6 million more users than we expected, thanks to the public’s newfound desire for contactless interactions at the checkout counter. Previously, we thought there would be 69.4 million proximity mobile payment users in 2020, but now we have that figure at 86.9 million.

millions and % change, 2020-2023

How Has Our Forecast for US Mobile ProximityPayment Users Changed?

2020

69.4 8.4%

86.9 21.6%

2021

74.7 7.6%

93.0 6.9%

2022

77.8 4.2%

97.4 4.7%

2023

80.1 3.0%

101.4 4.2%

Aug 2019 forecast July 2020 forecast

Note: ages 14+; mobile phone users who have made at least one proximitymobile payment transaction in the past 6 months; includes point-of-saletransactions made by using mobile devices as a payment method; excludestransactions made via tabletSource: eMarketer, June 2020260629 www.eMarketer.com

Copyright © 2020, Insider Intelligence Inc. All rights reserved. Page 8

■ Health and Fitness App Users. With gyms around the country closed for long stretches, health and fitness app users will jump to 87.4 million people this year. Before the pandemic, we had this figure rising to just 72.3 million, meaning 15.1 million additional people will be using their mobile devices to help stay in shape.

■ Live Video Viewers. The popularity of livestreaming video content was already growing explosively (including news, sports, live events, linear OTT, gaming, etc.), but 2020 will see even higher growth rates than we thought. We had 136.4 million people watching live video this year in our earlier forecast, but now we estimate that figure to be 151.5 million people, an additional uptick of 15.1 million viewers.

■ Subscription OTT Video Viewers. It is no secret that Netflix, Amazon Prime Video, Disney+, and many of their peers saw unexpected growth in 2020 due to the additional time families spent stuck at home. We originally predicted this already enormous user base would reach 192.7 million this year, but now we think it will burst past the 200 million threshold and hit 207.5 million. That’s 14.8 million more viewers than there would have been with no pandemic.

The Busts These digital user forecasts showed the biggest negative shifts compared with our pre-pandemic estimates:

■ Sharing Economy Users. Each of the four most steeply downgraded digital user forecasts are, unsurprisingly, related to travel and transit. Before the coronavirus, we estimated that 89.6 million adults would participate in the digital sharing economy, which is dominated by home-sharing and transportation-sharing. As both of those services struggled, this figure now sits at 57.0 million, a staggering decline of 32.6 million people compared with our earlier prediction.

■ Airbnb Users. Airbnb sits at the core of the digital home-sharing ecosystem, and the collapse of travel in 2020 hit the forecast hard. Previously, we thought 44.3 million adults would make use of Airbnb’s services this year, but now we have that number at just 17.0 million. That’s 27.3 million missing users compared with what could have been.

■ Uber Users. Uber is the biggest provider of shared transportation services in the US, and its large user base saw a stark downward adjustment once the pandemic hit. Instead of 63.3 million adult users in 2020, we now forecast Uber will have only 38.3 million, representing an absence of 25.0 million previously expected riders. Note that this figure refers only to Uber and doesn’t include the Uber Eats food delivery service.

■ Digital Travel Bookers. Booking travel digitally has long since become the norm in the US—but with so little travel happening in 2020, this metric was bound to decline. Instead of 129.6 million people booking travel online, that figure will be 113.4 million, wiping away 16.2 million potential bookers. Note that the absolute figure is still relatively high because a user needs to book only one travel-related service per year to qualify, and many people will still travel at least once in 2020.

Time Spent with Digital

Nearly every time spent category we track will end up accelerating by more than we thought it would this year, since the vast majority of people had so much additional time at home. Naturally then, the topline rollup of total time spent by US adults with all media (digital plus traditional) will increase the most.

At the beginning of the year, we thought users would spend an average of 12 hours, 31 minutes (12:31) per day with media, but now we calculate that figure will be a staggering 13:35 per day per person, representing an unexpected increase of over an hour (64 additional minutes).

The Booms These time spent forecasts showed the biggest positive shifts compared with our pre-pandemic estimates:

■ Time Spent with Smartphones. Smartphone time spent among adults was in line to tick up to 2:40 per day, but instead it will leap to 3:06. That’s almost 26 unexpected additional minutes per day staring at our phones.

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■ Time Spent with Subscription OTT Video Services. Just as Netflix and other OTT services experienced unforeseen user boosts, usage time per person will grow across all of these services more than previously expected. We projected that US adults would spend an average of 43 minutes per day with various OTT providers this year, but now we forecast that figure will be just over an hour, at 62 minutes. Note that this is an average for the entire population. Among subscribers, time spent will be much higher (1:42 per day).

minutes per day and % change, 2020 & 2021

How Has Our Forecast for Average Time Spent withSubscription OTT Services Among US Adult PopulationChanged?

2020

43(10.7%)

62(23.0%)

2021

46(7.4%)

67(7.3%)

Nov 2019 forecast April 2020 forecast

Note: ages 18+; includes all desktop/laptop, mobile and other nonmobileconnected-device time watching video on subscription OTT platforms; timespent with each medium includes all time spent with that medium,regardless of multitasking; for example, 1 hour of multitasking ondesktop/laptop while watching TV is counted as 1 hour for TV and 1 hourfor desktop/laptopSource: eMarketer, April 2020260630 www.eMarketer.com

■ Time Spent with Digital Video. Digital video—which encompasses any online video watched on a computer or a smartphone and essentially anything viewed via a game console, smart TV, or OTT service—is rapidly replacing traditional TV among younger generations. We anticipated 1:48 per day would go to digital video this year per US adult. But given the pandemic, we see that figure rising by an additional 13 minutes, to just eclipse the 2-hour mark at 2:01.

■ Time Spent with Messaging Apps. US digital users communicate with each other a lot, but they don’t spend as much time on mobile messaging apps as they do with other digital activities. However, this metric leapt off the page for its rate of increase this year. We initially forecast US adults would spend just over 13 minutes per day with messaging apps in 2020, but now that is expected to be over 24 minutes, an incredible 81.2% increase (11 additional minutes).

The Busts These time spent forecasts showed the biggest negative shifts compared with our pre-pandemic estimates:

■ None. Not a single digital activity saw a significant unexpected decline in time spent in 2020, as nearly everyone had a lot more time on their hands than we thought they would. Even time spent with traditional TV will increase this year, its first uptick since 2012 (reaching 3:49, representing a 20-minute increase instead of a previously expected 6-minute decline).

Ad Spending

In a very difficult year for advertising overall, nearly every ad spending metric we track will end up underperforming pre-pandemic expectations. Logically then, the combined category of total media ad spending will see the largest aggregate recalculation.

Earlier this year, we anticipated that the total ad market would reach $263.11 billion, but now we forecast 2020 will see $232.30 billion in ad spending. That amounts to an 11.7% reduction in our estimate, or $30.81 billion less in ad dollars than previously expected.

Copyright © 2020, Insider Intelligence Inc. All rights reserved. Page 10

The Booms These ad spending forecasts showed the biggest positive shifts compared with our pre-pandemic estimates:

■ None. In contrast to digital time spent—where there were no real “COVID-19 busts”—there were no real “COVID-19 booms” in ad spending. In other words, no category of ad spending grew much faster than originally expected. However, it is noteworthy that several industry-level digital ad spending categories did maintain a healthy performance in 2020, despite enormous macroeconomic headwinds. Industries like healthcare and pharma, consumer electronics, and financial services each maintained a robust growth rate for their digital ad outlays. The dramatic increase in demand for these products offset the dismal overall ad spending environment and recessionary conditions, leaving the final spending figures somewhat close to our original expectations.

The Busts These ad spending forecasts showed the biggest negative shifts compared with our pre-pandemic estimates:

■ Traditional Media Ad Spending. Traditional ad channels were almost all hit worse in 2020 than were the digital ones. TV, radio, print, and OOH ad spending all struggled mightily. We originally estimated traditional media ad spending would amount to $108.54 billion this year, but now we think it will plummet far under $100 billion, to just $89.91 billion. That’s $18.63 billion in unexpectedly fewer advertising dollars.

■ Digital Ad Spending. Digital ad spending did not suffer as much as traditional media did, thanks to the ecommerce boom and the accelerated digital transformation discussed elsewhere in this report. However, due to severe reductions in travel and auto digital advertising, among others, total digital ad spending will still be 7.9% less than we thought it would be at the beginning of the year. The pre-pandemic estimate was $154.58 billion, and now it is $142.39 billion. Notably, this still represents 7.5% spending growth compared with 2019—which is a healthy figure but down from our pre-pandemic forecast of 16.7% growth. We updated our digital ad spending forecast twice in 2020, and the results show the near-term damage will not be as severe as originally feared, and that the long-term outlook has unexpectedly improved.

billions, March vs. June vs. Oct 2020

How Has the Forecast for Digital Ad Spending in theUS Changed? 2019-2024

2019

$132.46$132.46

$132.46

2020

$154.58

$134.66 $142.39

2021

$177.64

$163.10

$171.20

2022

$198.34

$187.89

$197.05

2023

$215.25

$208.33

$221.18

2024

$228.65

$225.66

$242.80

March 2020 forecast June 2020 forecast Oct 2020 forecast

Note: includes advertising that appears on desktop and laptop computersas well as mobile phones, tablets, and other internet-connected devices,and includes all the various formats of advertising on those platformsSource: eMarketer, Oct 2020259111 www.eMarketer.com

■ TV Ad Spending. TV is the last bastion of massive-scale traditional ad spending, but its dollar figures have been declining for years. This drop-off will end up accelerating in 2020. We initially estimated $72.00 billion in spending in the US this year, but now we have that figure 17.0% lower, at $60.00 billion.

■ Display Ad Spending. Display ad spending, which includes digital video ads, had been growing at a robust pace for many years. It will not escape 2020’s downward readjustments, however. We originally forecast $84.64 billion for display ads this year, but now we think that figure will be $77.79 billion, equating to $6.85 billion less spent than otherwise expected.

■ Search Ad Spending. Like display ad spending, search also took a hit for the first time. We didn’t have to revise either category down by as much as we thought midyear—and both will still grow in 2020—but it is remarkable that we had to downgrade either one given how many years of skyrocketing gains both have demonstrated. Search’s struggles, driven mainly by the cratering of travel industry ad spending, led us to change our 2020 forecast from $63.92 billion to $59.22 billion.

Copyright © 2020, Insider Intelligence Inc. All rights reserved. Page 11

Ecommerce and Overall Commerce

Perhaps the most consequential digital story of 2020, the widespread embrace of ecommerce during the pandemic unexpectedly accelerated the channel’s progress by almost two years. In January, we forecast total ecommerce sales would be $674.88 billion in 2020; now we have that figure well over $100 billion higher, at $794.50 billion. On the flipside, in-person shopping took a massive hit.

billions and % change, 2020-2023

How Has Our Forecast for US Retail Ecommerce SalesChanged?

2020

$674.88 13.2%

$794.50 32.4%

2021

$761.26 12.8%

$843.15 6.1%

2022

$856.42 12.5%

$952.76 13.0%

2023

$961.76 12.3%

$1,072.81 12.6%

Jan 2020 forecast Sep 2020 forecast

Note: includes products or services ordered using the internet, regardlessof the method of payment or fulfillment; excludes travel and event tickets,payments (such as bill pay, taxes or money transfers), food services anddrinking place sales, gambling and other vice goods salesSource: eMarketer, Sep 2020260638 www.eMarketer.com

The Booms These commerce-related forecasts showed the biggest positive shifts compared with our pre-pandemic estimates:

■ Consumer Electronics Ecommerce Sales. Ecommerce had a banner year across the board, but the consumer electronics industry was particularly well suited to serve the needs of a population suddenly stuck at home managing unexpected work, school, and leisure time. Consumer electronics ecommerce sales were in line to be $150.10 billion but instead will be $179.35 billion. That’s $29.30 billion in unanticipated online spending on devices to help us work, learn, and play from home.

■ Furniture and Home Furnishings Ecommerce Sales. US households also found themselves unpredictably focused on home improvement this year, even as a lot of big-box furniture stores were closed or less accessible. This led to a big shift in spending from brick-and-mortar to digital in the category. In January, we estimated furniture and home furnishings ecommerce would amount to $76.80 billion, but now we forecast that figure will be $92.32 billion—an uptick of $15.50 billion. That’s a massive increase given disrupted supply chains during the pandemic.

■ Health, Personal Care, and Beauty Ecommerce Sales. Not surprisingly, healthcare-related ecommerce also dramatically upshifted in 2020. We previously forecast $58.70 billion for the category but now see it reaching $73.52 billion, equating to $14.80 billion in extra online sales.

■ Food and Beverage Ecommerce Sales. Although not as dramatic in absolute terms (because it is coming from a low online base), no ecommerce category saw such a huge percentage leap from our earlier forecast to our later one. Food and beverage ecommerce sales were expected to equal $32.20 billion, but as a generation of users explored new ways to eat at home, our forecast adjusted upward by a massive 41.3%. We now estimate $45.47 billion in sales for the category this year.

■ Click-and-Collect Sales. The final forecast worth highlighting is another that is representative of 2020’s social adjustments: the click-and-collect phenomenon. Before the pandemic, we estimated $50.66 billion in sales would transact via the click-and-collect format this year. We now forecast that figure will be $58.52 billion, an increase of 15.5% over our previous estimate.

The Busts These commerce-related forecasts showed the biggest negative shifts compared with our pre-pandemic estimates:

■ Brick-and-Mortar Retail Sales. As ecommerce gains, so declines brick-and-mortar. With many consumers unable or unwilling to shop in-person, we adjusted our pre-pandemic brick-and-mortar retail sales forecast of $4.946 trillion down to $4.711 trillion. The decline is representative of a relatively small 4.7% downshift from our previous estimate, but given the gargantuan scale of US retail, this still equates to $234.50 billion less in sales for the nation’s in-person stores.

Copyright © 2020, Insider Intelligence Inc. All rights reserved. Page 12

■ Auto Retail Sales. Although the auto industry has rebounded well in H2 2020, the weeks and months of limited business during the initial coronavirus outbreak will sink the annual numbers. Previously, we forecast $1.329 trillion in auto sales this year, but now we have that figure at $1.225 trillion—an unexpected absence of $103.47 billion in spending.

■ Digital Travel Sales. The entire ecosystem of travel-related businesses and services will show brutal results in 2020. From hotels to airlines to ad spending, it will be the worst year on record for most travel companies. For digital travel sales—which nowadays is how nearly all travel is booked—we originally forecast $215.74 billion in spending. But that estimate cratered by 46.6% on second look and now sits at just $115.27 billion. That’s almost exactly $100 billion less in revenues for the industry.

■ Apparel Retail Sales. Apparel sales via ecommerce will have a surprisingly strong year in 2020 all things considered, but not by nearly enough to save the overarching category. Most people still prefer to buy clothing in stores, and these sales will decline precipitously. Apparel was in line for $483.40 billion in sales this year before the pandemic hit—but the final figure will be $88.51 billion less than that, for a total of $394.89 billion.

Behind the Numbers

Our forecasts are based on an analysis of data from research firms, online and mobile tracking services, government agencies, media firms, public companies, and interviews with industry experts. Data is weighted based on methodology and soundness. Each eMarketer forecast fits within the larger matrix of all our forecasts, with the same assumptions and general framework used to project figures in a wide variety of areas. Regular reevaluation of available data means the forecasts reflect the latest business developments, technology trends, and economic changes. All of our latest estimates take into account the effects of the coronavirus pandemic.

How did we select which forecast changes to feature in this report?

For the most part, the forecasting line items shown herein involve estimates that changed (up or down) over the course of 2020 by at least 10 million people, by at least $10 billion, or by at least 10 minutes per day in terms of time spent. For those metrics that focus on growth rates, we include those categories that increased or decreased by more than 10%. Note that this collection is not comprehensive, but it covers our highest-profile forecasts that saw extreme shifts, as well as topically representative forecasts that can stand in for a swath of others that are similar in nature. The connecting tissue is that they all changed radically compared with what would have happened without COVID-19.

Key Takeaways

■ US consumers drastically reduced spending on services this year and instead spent the money on consumer goods. Households used the cash they usually spend on restaurants, travel, and OOH entertainment and directed it to consumer electronics, packaged goods, home furnishings, and personal care products—much of it via ecommerce channels.

■ Unexpectedly rapid digital transformation accelerated various disruptions that were already underway. Ecommerce thrived, dominant ecommerce retailers consolidated their position, digital ad spending stole more share from traditional, and digital usage boomed in the financial services industry.

■ Some of the disruptions identified in this report will prove to be short term, whereas others will be long lasting. The leap forward for financial services digital users represents a long-term shift, whereas the collapse of the sharing economy is set to be a short-term phenomenon. The spending transition away from brick-and-mortar toward ecommerce in new and unexpected categories is also forecast to be a long-term trend.

Read Next

US Digital Users 2020: Some Media Activities Got a Pandemic Bump, Others Didn’t. Here’s Why.

Search Marketing 2020: Pandemic Promises Short-Term Pain but Long-Term Gain

Holiday Shopping 2020: Unprecedented Holiday Ecommerce Gains Will Make Up for Brick-and-Mortar Shortfall

Copyright © 2020, Insider Intelligence Inc. All rights reserved. Page 13

Editorial and Production Contributors

Anam Baig Senior EditorRahul Chadha Senior EditorJoanne DiCamillo Senior Production ArtistDonte Gibson Chart EditorKatie Hamblin Chart Editorial ManagerDana Hill Director of ProductionErika Huber Copy EditorAnn Marie Kerwin Executive Editor, Content StrategyPenelope Lin Copy EditorStephanie Meyer Senior Production ArtistHeather Price Deputy EditorMagenta Ranero Senior Chart EditorAmanda Silvestri Senior Copy Editor

Page 14Copyright © 2020, Insider Intelligence Inc. All rights reserved.

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