“It’s not what you achieve, it’s what you overcome. That’s what defines your career.” ~ Carlton Fisk, Major League Baseball Catcher
Question: How do you see retailers keeping pace with changes in consumer habits?
Answer: During the Spring of 2018, this column ran two articles on The Amazon Phenomenon and the explosive growth in online shopping. Little did we know at that time how important the evolution of online shopping would be in our lives today.
The initial shift from brick-and-mortar establishments to e-commerce was driven by cost efficiencies and convenience. As recently as 2019, Nielson Research reports showed 89% of total retail sales originated in brick–and-mortar locations. This shows that retail locations are by no means doomed. Even with COVID-19, retail settings will evolve with the help of technology.
The advent of contactless shopping and an increase in curbside pickup are direct results of the pandemic and have been able to accelerate with the help of technology and innovation. Many creative and nimble entrepreneurs are thriving amid the pandemic being at the right place at the time.
During April 2020, online sales increased 8.5% and were up 21.6% as measured year–over–year according to the U.S. Commerce Department. In addition, in May 2020, Target Corporation reported an increase of 1,000% in curbside drive-up purchases compared with a year earlier. Lowe’s, Home Depot, and Walmart saw similar trends. One of the newer innovations, contactless shopping, may potentially eliminate the checkout line. The innovations in online commerce will apply to offline commerce as well.
E-tail and E-commerce are here to stay. Technology continues to change how and where we shop. With greater convenience, variety, and instant gratification, consumer spending will likely continue its 70% contribution to overall Gross Domestic Production (GDP). According to Statista, the top two shopping apps are Amazon and Walmart with 150.6 million and 76.45 million users respectively. Amazon Prime members also enjoy free delivery when purchasing from Amazon Fresh. Prime Membership increased by 50% between April 2018 and April 2020.
Consumers are clearly drawn to smooth, seamless and stress-free shopping experiences. According to Amazon, in the North American region, sales grew 29% year-over-year in the first quarter of 2020. As we shop from the comfort of our couch in our jammies, don’t forget that your latest social medial information and other preferences are being directly fed to online sales associates who will customize your shopping experience.
Society continues to value experiences, even if it’s just an Instagram worthy meal or socially distance approved venues designed to deliver adventure and photogenic backdrops. These desires will bring alternative uses for outdated retail space. Changing form and function may benefit all concerned. Necessity is the mother of invention. As we continue to evolve and transition to keep pace with health concerns and other dramatic changes in society, technology continues to provide solutions and endless opportunities. It’s time to think outside of the box. Stay focused and plan accordingly.
There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Past performance does not guarantee future results. The opinions expressed are those of the writer as of August 26, 2020, but not necessarily those of Raymond James and Associates, and subject to change at any time. All information provided herein is for informational purposes only and is not intended to be, and should not be interpreted as, an offer, solicitation, or recommendation to buy or sell or otherwise invest in any of the securities/sectors/countries that may be mentioned. Information obtained from outside sources is believed to be reliable but cannot be guaranteed as such.
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