retail news in context, analysis with attitude

The Wall Street Journal reports that "even as pandemic restrictions end, and many people continue working and watching movies at home, stores are mounting a comeback. E-commerce companies that were counting on a broad secular shift are now facing slowdowns, and the prospect of expensive investments in bricks-and-mortar retailing while speeding up delivery times.

"It turns out there are limits to buying stuff on screens. Foot traffic to malls and bricks-and-mortar stores has rebounded since vaccines and booster shots became widely available and the worst waves of the virus receded. Sales slowed at many digital storefronts specializing in apparel, home furnishings and other categories where many consumers prefer to see in-person and touch what they are buying."

According to story, "Data suggests consumers are finding a new balance between online and in-person shopping. In the second quarter of 2020, as stay-at-home measures were in place, the share of U.S. retail sales that happened online surged more than four percentage points to 15.7%, according to Census Bureau data adjusted for seasonal factors. By the fourth quarter of 2021, that share had dropped to 12.9%, putting consumer buying habits roughly back to their prepandemic trend.

"This March was the first month since the pandemic hit during which e-commerce sales declined from the same period a year earlier while in-store sales rose, according to Mastercard SpendingPulse, which tracks transactions made over the Mastercard payments network as well as survey-based estimates for spending with cash and checks. The drop in online spending was 3.3%, the first year-over-year decline since November 2013. The rise for bricks-and-mortar stores was 11.2%."

KC's View:

This isn't entirely surprising.  After all, there is a lot of pent up emotion and desire out there, which is one of the reasons that, despite rising prices, so many people are traveling these days - they just want and need to get out there.

Same goes for bricks-and-mortar shopping.  Prices may be going up, but two years of pandemic living has created demand - not just for product, but also for experiences.

I did find one quote from the story to be interesting, as one analyst told the Journal,“We’ve got over 100 years as a society of going into a store to buy something … That muscle memory doesn’t just switch off because you were forced to buy things online a couple of times during a pandemic."

A couple of times?  Really?  What pandemic was this guy experiencing?  That statement belies the reality of how e-commerce grew during the pandemic, and it strikes me as typical of people who don't accept the notion that a permanent transition is taking place.

Only a fool ever would've entertained the notions that stores were going away.  There always will be stores, but more and more (and yes, in fits and starts) we're going to see that stores with sustainable business models will be the ones that offer differentiated products and experiences, that give people an actual reason not to buy online.