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  • Writer's pictureRick Kenney

Q2’s Hiccup Masked Digital’s Heavy Hint

After stacking quarter upon quarter of mega growth since the pandemic Q2 2021 raised some eyebrows. With digital sales up 9.3%, execs collectively gagged over the first single digit growth since we were tapping out T9 texts. Meanwhile, shoppers took to the streets for the first time in 18 months, helping shoot store sales up 20% YoY.

Hot takes on a sluggish digital quarter temporarily plugged the flood of NFT bounties and crypto-chats. Retail is rightsizing, as digital regresses to it’s pre-pandemic penetration, or so they said. Not so fast. The top-line growth is masking the heavy hint of digital shopping.

Here are the three KPIs underneath the top-line that shape the story.

AOV Surged

Average order value cleared $90, up 16% YoY, and outpacing the last two Q4 peaks as well.

A lower than typical discount rate. 17%, claims some credit for the rise, as can the rise in the CPI, as pointed out by the Shopping Index. This is a good sign for shopping sentiment though, as those buyers show purchase conviction. Those that aren’t buying are the drag on digital sales growth, because...

...Conversion Fell

OK, it didn't just fall - conversion rate cratered, falling 18% YoY. The biggest drop in recent memory. Ugh. Leading up to, and during, the worst of the pandemic, digital growth was a somewhat balanced equation of positive levers; the product of traffic and spend growth. This past quarter bucked the trend, as spend fell 5% - despite the soaring AOV. On the bright side, a sharp decline in conversion is counterbalanced by a rise in...

...Traffic, which Outpaced Digital Growth

Even on top of the massive Q2 2020, shoppers helped paint the ecommerce dashboard green, with an 8% gain in visits, according to Salesforce. With this traffic gain, we hear the heavy hint of digital shopping, shoppers are not abandoning digital, they are starting their journey there. Q2 was a re-distribution of sales as shoppers could finally fling doors open IRL. Had Q2 been a 'steady-state' period, digital sales growth would have likely been 12-16%, reflecting a balanced contribution of traffic and spend growth.

So, what comes next? What can we read into one quarter's worth of data that ran counter to the recent trends? A caveat and a projection.

The caveat: Volatility is still pulling the strings. The Delta variant and a bi-furcated back-to-school continue to ensure that even well-nurtured forecasts are as reliable as storm paths


The projection: Digital aims to comp Q3 2020, another period of pandemic-influenced growth. With the hardening of omni-shopping patterns, and the COVID-cohort of shoppers more experienced in clicking and tapping, look for the next few months to again break double-digit digital sales growth, carried by a solid rise in traffic, and better-than-Q2 conversion. And, with a new round of government mandates challenging the service sector, shoppers will again pick up their paintbrushes and Pelotons.

While stores are by no means dead -- at the mercy of macro issues for sure -- neither is digital slowing, as shoppers increasingly find themselves shopping digitally across the entire journey.

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