Pandemic overdrive for e-commerce
The desk interprets the massive surge in e-commerce due to the COVID-19 pandemic as a lasting economic shift, as businesses adapt to new consumer behaviors. Per the full note from Nordea, data indicates that online retail has jumped from approximately 15% to nearly 25% of total retail sales in Nordics—a trend suggesting online sales could capture 30% of the market by 2024. As institutional traders consider the implications on currency pairs, the momentum towards digital retail could influence currencies tied to retail performance and economic resilience, particularly in the Nordics and broader European context.
What the desk is arguing
The desk posits that the accelerated adoption of e-commerce during the pandemic will have significant and lasting impacts on retail models and consumer behavior. According to Nordea's analysis, the shift towards online shopping is not just a temporary reaction but represents a fundamental change in retail dynamics, reflected in the growing market share of e-tailers.
Supporting this thesis, the data reveals that non-food purchases online account for nearly 45% of retail sales in the Nordic region. This sharp increase indicates a dramatic shift in consumer preferences, with further projections noting that the online share of total sales could reach 30% by 2024—exceeding previous expectations by four years.
Where it sits in our coverage
Our consensus target for the Nordic currencies is set at 1.075, with a range indicating potential fluctuations between 1.04 and 1.12. Notable targets include: - jpmorgan: 1.10, Mar26 - bofa: 1.04, Mar26
This perspective aligns with jpmorgan, which shares our optimism on the Nordic currency movements driven by consumer behavior trends. However, it contrasts with bofa, which remains more cautious, reflecting a broader range in expected future performance.
How other firms see it
Several firms, including jpmorgan and barclays, resonate with this bullish view on e-commerce growth driving economic recovery, particularly in the Nordics. In contrast, bofa and citi express reservations about sustainability in the surge of online retail and its real impact on economic growth.
Relevant currency pairs to watch are EUR/NOK and EUR/SEK, which may reflect the underlying trade dynamics shifting towards e-commerce. Additionally, trends in consumer sentiment and retail performance metrics will serve as indicators for future currency movements contingent on the e-commerce landscape.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01E-commerce in the Nordics has surged to an estimated 25% of total retail sales, driven by pandemic-induced shopping habits.
- 02The data indicates a potential trajectory for online sales to reach 30% by 2024, accelerating pre-pandemic growth rates.
- 03Institutional traders should consider how this e-commerce shift could influence currency pairs related to Nordic economies.
- 04The e-commerce growth may lead to lasting changes across multiple sectors, not just retail, affecting broader economic indicators.
Market implications
Traders should monitor the EUR/NOK and EUR/SEK pairs for any signs of volatility driven by retail data releases in the upcoming months. A sustained shift towards e-commerce is likely to bolster the currencies of Nordic economies, especially if the sales growth continues to exceed expectations.
Risks to this view
A significant reversal in consumer confidence or a slowdown in retail sales could invalidate the current bullish sentiment surrounding e-commerce growth. Additionally, unexpected regulatory changes or economic shocks could dampen the market's outlook for Nordic currencies tied closely to these shifting retail dynamics.
Nordea On Your Mind Pandemic overdrive for e-commerce 23-09-2021 Human connectivity has soared over the past decade, offering new online solutions for our private and work lives. In the latest issue of Nordea On Your Mind, we explore the COVID-19 pandemic's disruption of business models and turbocharging effect on e-commerce. COVID-19, a turbocharger for online shopping Social distancing to contain the pandemic has convinced (or even forced) many new customer to shop online.
The surge in e-commerce growth is evident in the strong stock market outperformance by e-tailers, who now account for 70% of the market cap of the global retail sector. Amazon, a single company, represents 61% of the market cap of the US sector. Brick-and-mortar retailers need to follow consumers online.Fortunately, they can get help from the recently evolved ecosystem of e-commerce enablers, and avoid developing all digital and fulfilment capabilities in-house.
Finally, good data to measure and confirm big leap for Nordic online retail in 2020 Good data for online retail sales is hard to come by, as it is typically based on consumer surveys. We have used aggregated and anonymised Nordea card transaction data to gauge growth in Nordic e-commerce, seeing an online share of total retail sales soaring from ~15% to ~25% in just the past year. For non-food, the online share is now ~45%.
The UK analogy again: Online share of Nordic retail sales could reach 30% already in 2024 We have revisited our analysis from 2019 where we use the UK as a template to simulate growth in online penetration for Nordic retail sales. Applying the pre-pandemic penetration growth rate to last year's numbers, the COVID-19 boost to e-commerce in 2020 alone corresponds to a full four years' rising penetration. The new trajectory suggests the online share of sales should reach 30% in 2024, instead of 2028 under our pre-COVID assumptions - by 2028, the new trend could see the online share top 40%.
Nordea On Your Mind is the flagship publication of Nordea Investment Banking’s Thematics team, which produces research for large corporate and institutional clients. The research does not contain investment advice and typically covers topics of a strategic and long-term nature, which can affect corporate financial performance. Top decision makers at Nordea’s large clients across the Nordic region receive Nordea On Your Mind around eight times per year.
The publication’s themes vary widely, and many are selected from suggestions by clients. Examples of covered topics include artificial intelligence, wage inflation, M&A, e-commerce, income inequality, ESG, cybersecurity and corporate leverage. Take-off for food on the web Food is the biggest retail category, accounting for ~43% of the total market.
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