Impact of the pandemic on retail shown through six graphs
The retail sector is expected to face continued struggles in 2021, particularly in the apparel segment and those with a heavy mall footprint. This is due to lingering challenges from the global health crisis, with trends accelerated by the pandemic posing problems for retailers.
Despite the challenges, some retail giants have managed to thrive. Walmart saw revenue growth as it absorbed tariff hikes, while Home Depot reported sales up nearly 5% in Q2 and reaffirmed its full-year outlook. Active footwear sales were a bright spot in the first half of the year, with Brooks Running global revenue up nearly 20% in Q2.
The Dow Jones U.S. Retail Index took a nosedive in March 2020 but ended the year strong, with improved performance from mid-April onwards. However, retail sales bounced back unevenly, with apparel sales falling hard in 2020. Year-over-year declines were recorded in March (53%), April (89%), May (64%), June (25%), and July (20%).
Foot traffic analytics firm Placer.ai found that year-over-year foot traffic collapsed by 26% in March, followed by 45% and 30% in April and May, respectively. Since June, it's improved, but traffic has still been down by between 13% and 18% every month.
The vaccine rollout is expected to bring a healthier environment for the retail industry in 2021, particularly the second half of the year. However, the vaccine rollout does not eliminate near-term hurdles for retailers.
E-commerce sales are projected to reach nearly $795 billion for the full year 2020, up from just over $600 billion in 2019, due to the pandemic. U.S. sales of clothing and accessories fell 30% from January to October in 2020, leading to potential store closure announcements and bankruptcy filings among retailers selling apparel.
Store closures continued to pile up in 2020, with 8,736 permanent store closures, following the 9,832 closures in 2019. Retailers have been more focused on stopping the bleeding than looking ahead, resulting in fewer investments for the future.
Austerity measures have been put in place by retailers, slowing investments in innovation. Tyler Higgins predicts that supply chains in 2021 will focus on increased agility, digital transformation, and resilience to better respond to disruptions.
The pandemic continues to be a critical factor for retailers in 2021, despite the rollout of vaccines. Stores will have to be more innovative with experiential shopping to entice shoppers, as many experiential shopping features have been touch-based in the past.
The share of e-commerce jumped to 19.0% in 2020, a growth that was expected to occur around 2023 based on previous trajectory. This rapid shift to online shopping is expected to continue, with no-inventory and pop-up stores likely to grow as well.
The retail industry saw a record high of retail bankruptcies in 2020, with 52 bankruptcies within the companies tracked by S&P Global Market Intelligence, a 63% increase from the previous year. The industry is expected to see a healthier environment in the second half of 2021, but the impact of the pandemic will continue to be felt no matter how long the health crisis remains an active concern.
Read also:
- Foreign financial aid for German citizens residing abroad persists
- "Germany appears less environmentally friendly compared to Texas, according to Harald Lesch's climate documentary"
- Investing 1 billion funds into the police force of North Rhine-Westphalia for battling rodents and mold issues
- Tesla resurrects transferred Full Self-Driving feature amid other promotional offers
