Noah Wilbur | Opinions Editor
As of 2021, the retail industry is still one of the largest sectors in the U.S., with trillions in sales and millions of people employed by both big box retailers as well as small mom-and-pop stores. To make a long story short, consumers are still very much interested in spending money with no signs of them slowing down, even after the emergence of COVID-19.
Nonetheless, within the last two decades, there has been a massive shift in the industry toward a more concentrated focus on expanding online sales. The advent of e-commerce influenced everyday people like you and I to purchase products from the comfort of our own homes, rather than hopping in our vehicles and driving to the nearest Dick’s Sporting Goods.
Not to mention, the move to e-commerce also brought forth an increasingly competitive landscape in the retail industry, as new innovative start-ups continue to appear seemingly every passing day. As a result, those retailers who failed to act and shift their core business models from brick-and-mortar to online have struggled immensely against the likes of Amazon, Walmart, Target and more.
From dwindling cash balances and falling stock prices, to offloading assets and quickly declining revenue growth, there is a long list of legacy retailers who failed to make the necessary transition to online and thus met their inevitable demise.
For example, on May 15th of last year, JCPenney filed for Chapter 11 bankruptcy after failing to develop an online presence. Struggling to keep its door open since 2010, JCPenney had closed more than 20% of stores and cut over 40% of staff within a space of nine years — an obvious indicator that the company was struggling to stay afloat way before the coronavirus pandemic.
What’s more, due to the pandemic, the shift to e-commerce has only accelerated since consumers were unable to leave their homes and relied solely on online platforms to purchase products and services.
The impact on the retail industry, you might ask? Well, those firms who were already struggling to develop their e-commerce sites have seen millions in losses while also being forced to lay off, or furlough, large amounts of their workforces in order to reduce costs during this tumultuous time.
On the other hand, those with a strong online presence actually flourished during the pandemic.
For those retailers struggling in the wake of e-commerce and COVID-19, the only chance of survival is to reduce their brick-and-mortar footprints and make the necessary investments into e-commerce.
Although these investments will certainly be large and difficult to fund, the truth of the matter is that those who continued to lag behind this shift in consumer behavior, will surely fail in the long run. We’ve already watched it happen to some of the largest department stores the world has even seen, and it won’t be long till it occurs again. The future is now and only the companies with a long term vision will prevail.