Salesforce reports Q1 decline in digital sales; first recorded drop in the index’s nine-year history

Salesforce is reporting a year-over-year decline in global digital sales for Q1 2022 as recorded by its Shopping Index, the first-ever decline in the nine year history of the index.

"With the first quarter of 2022 now in the rearview mirror, Salesforce Q1 Shopping Index data shows a 3% year-over-year (YoY) decline in global digital sales. This marks the first recorded drop in the index’s nine-year history," according to a release from Salesforce.

According to Salesforce's reporting:

• YoY global spend is down 3%
• Traffic is down 2%; and
• Order volumes are down 12%

Europe, which is under the pressure of surging inflation, fuel costs, and an active war, was the hardest hit by the decline, seeing a 13% drop in sales and a 17% decline in order volume.

“Inflation has finally caught up to bullish spending, with consumers buying fewer items from fewer retailers,” said Rob Garf, VP and GM, Retail at Salesforce. “This likely isn’t a temporary mindset, but instead a signal of a larger consumer behavioral shift. To address this, retailers must remove friction between physical and digital channels to attract and retain loyal shoppers.”

Does this mean the spike seen in eCommerce adoption during the pandemic will completely recede? Definitely not, says Caila Schwartz, director of consumer insights and strategy, retail & consumer goods at Salesforce.

"Early signs show that consumers have adopted and are retaining their learned digital behaviors since 2020—and retailers must apply this in the physical and virtual worlds," Schwartz said.

It does mean, however, that brands have to continue to innovate, both digitally and with their brick-and-mortar presence.

Schwartz recommends:

• Enhance private labels;
• Engage loyal customers;
• Optimize the supply chain; and
• Expand marketplaces

As consumer sentiment wains, the power of trusted creators also can't be understated.

According to an October 2021 Think with Google article, "Creators often build trust and interest by sharing stories that viewers can relate to — stories that show a sense of authenticity and vulnerability. In a recent Ipsos study, 47% of U.S. consumers ages 18 to 24 surveyed agree that they feel a personal connection to a brand when it’s used by a creator they like."