The multitrillion-dollar retail industry has made many investors very rich. But before you throw your hat into this ring, you need to understand what the future holds for the industry, and how the ongoing e-commerce revolution is likely to shake out.
The future of retail
E-commerce remains in its infancy. Online sales have grown an average of 20% a year over the last decade. Yet in 2010, they only accounted for 4.6% of total retail sales! As the chart below suggests, this is about to change.
Source: Forrester Research (future estimates are projections and subject to change).
Forrester Research estimates that online sales will grow 10% a year between now and 2015, at which point the Internet will account for 11% of all retail sales. Exclude groceries, and that share jumps to 15%.
A full $30 billion of this growth is expected to come from mobile commerce -- namely, smartphones and tablets. Forrester predicts that this segment will expand from its current 1% of online sales to 7% by 2016.
An additional $14 billion is projected to come from social commerce sales -- websites like Facebook and LinkedIn
The retail spectrum
At one end of the retail sector, you'll find companies that operate exclusively online, such as Amazon.com
The other end of the spectrum harbors companies that focus primarily on physical stores, including Wal-Mart
Source: Google Finance.
Somewhere between these two extremes lie companies bridging the divide. Office suppliers Staples
Although this structure explains the lion's share of the retail industry, lululemon athletica
The Foolish bottom line
Make sure to keep the future of e-commerce in mind when choosing retail investments. Although there are notable exceptions, the companies leading this revolution will generally offer your best bet to get rich from retail stocks. Just ask early Amazon shareholders -- like Fool co-founder David Gardner.
To kick-start your search, check out our free report "The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail."
The Motley Fool owns shares of Best Buy, lululemon athletica, and Wal-Mart. Motley Fool newsletter services have recommended buying shares of Netflix, Best Buy, Staples, Lululemon, Wal-Mart, and Amazon.com; writing naked calls in Office Depot; creating a diagonal call position in Wal-Mart; and buying puts in Netflix. Try any of our Foolish newsletter services free for 30 days.
Fool contributor John Maxfield does not own shares in any of the companies mentioned in this article. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.