March marks the four-year anniversary of the Great Shutdown that launched the pandemic, a crisis the business pundits proclaimed would smother the bricks-and-mortar retail industry while transforming Amazon into a monopolistic octopus. Life as we knew it would never be the same. We would have to adapt to a looming but undefined “new normal.”
Well, the new normal is here, but is it really so new? Memory is slippery. The way we recall things today is often at odds with how we experienced them. What was going on in retailing in the quarters just before the coronavirus became an international crisis?
After reviewing news and predictions from that pre-Covid period, along with measuring sticks like rates of unemployment, consumer spending, and store closings, the pandemic looks less like a retail apocalypse and more like a giant hiccup.
Some long-term trends that predate the epidemic by years are still in the news today.
“Amazon: Past Its Prime” was the headline on this column in November 2019, referencing a growing chorus of mainstream media coverage and a First Insight study that found shoppers were visiting the site less often. Amazon did boom in the early stages of the pandemic, and today it owns an estimated 40% of the e-commerce market.
But growth in e-commerce as a share of customer wallet has flattened lately. Competitors are catching up and e-commerce is now just an element of omnichannel marketing. And then there are the various anti-monopoly efforts that have popped up in Europe and the US.
Amazon is a terrific catalog to peruse and daydream, but in the end, people still enjoy going to stores, being able to handle merchandise, and the fun of discovery. That is why every major retailer is or plans to invest heavily in building out new fleets of smaller stores, in neighborhoods closer to their customers. The retail apocalypse did wipe out many brands, but most were wobbly to begin with, such as Bed Bath & Beyond.
“Department Stores Dying A Death Of A Thousand Cuts” was the headline here in January 2020, just days before the world was first learning about a mystery illness in China, just before the shutdown. So, no change there–still dying.
“Retailers Face Mass Extinction in Pandemic Fallout,” shouted an August 2020 headline on statista.com. A market intelligence company was predicting up to 25,000 stores would close that year. The actual count was under half that.
The next year openings exceeded closings by two-to-one. Today you can hardly find a neighborhood shopping center that isn’t tearing down a movie theater to build a mini-Target or a Whole Foods.
What about the customers? How were the stats before 2020 compared with today?
Just before the shutdown, Federal Reserve figures show unemployment was 3.5%, the lowest rate in 70 years. Today the rate is 3.9%. That’s about as close to full employment as it is possible to get, at least statistically.
Just before the shutdown, the Fed’s measure of the nation’s personal income stood at almost $14 trillion. Over the seven years prior, a period of low inflation, the total had grown by only 5%. From the end of 2019 until today, slightly more than four years, personal income has swelled by 25%.
Much like the widely predicted 2023 recession that never happened, it looks like the retail apocalypse was canceled. In many ways, the new normal feels like the old normal: listen to customers and give them what they want because they do want stuff, not just experiences.
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