US conventional retailing crashes

US retailing

The latest numbers on US retailing illustrate how much has changed in the economic structure of developed economies.  

Data generated by the retail control systems company Sensormatic suggests that physical store retail ‘footfall’ fell by 52% on ‘Black Friday’ as compared to the same period in 2019. For the week leading up to Black Friday sales fell by 45.2%. Black Friday is one of the busiest shopping days of the year.

In contrast, Adobe Analytics reported that online purchases had increased by 22% on Black Friday as compared to last year, accounting for approximately $9bn total in sales. However, the pattern of shopping has changed as consumers shift their activity to the internet. The subsequent ‘Cyber Monday’ now appears to be the largest shopping day, with Adobe estimating spending to be between $10.8bn and $11.4bn.

Although these numbers might be flattered by the effects of obstructions to shoppers visiting physical stores as a consequence of the COVID-19 panic, such is the magnitude of the decline in conventional retail activity that it seems unlikely to recover to its previous state.

This is likely to be re-enforced by the restructuring going on within conventional retailing. In the UK alone this week (w/c November 30), two major retail groups have collapsed into administration. One, Debenhams, has been troubled for some time, however, the other, Arcadia Group, was a leading clothing retailer until fairly recently. Their disappearance will strongly affect the level of competition and choice for the customer in British retailing, a gap that is likely to be filled through online sales.

These developments illustrate the magnitude of economic restructuring in many developed economies. As a result, logistics markets will never be the same after 2020, with conventional retailing receding in importance with a subsequent impact on the nature of logistics provision and on areas such as the nature of the warehousing market. Similarly, e-commerce logistics will remain a huge element in the market even if its rate of growth moderates. Yet strangely the impact of the decline has been obscured by a boom in other sectors of logistics. It will be interesting to see if the effects on logistics service providers emerge in 2021.

Source: Transport Intelligence, December 1, 2020.

Author: Thomas Cullen