As E-Commerce Takes Over, Is Brick and Mortar Still Viable?

With internet usage growing each year, the economy has already begun to feel the transfer of wealth from traditional brick and mortar stores to their digital competitors. This trend has increased markedly since the coronavirus pandemic, with many deciding to forgo all in-store shopping due to potential health concerns. Nowadays, almost every product and service imaginable is available online, including platforms that handle groceries and other daily shopping needs. With the movement towards digital platforms, will brick and mortar stores be able to survive?

Moving Online

According to the UK’s Office for National Statistics (ONS), online sales increased by 46 percent year over year in 2020. At the same time, retail sales in that same period fell by 1.9 percent, the largest single fall recorded since the ONS began tracking this statistic. With Covid-19 keeping many non-essential stores closed in the UK and abroad, shoppers had to find an alternative to fulfil their needs. This transformation was felt broadly across the retail economy, with sectors like clothing and apparel experiencing a 25.1 percent sales decrease from the previous year.

There were only two retail sectors that showed growth: food sales, as people stocked up for lockdowns compounded by the inability to eat out at restaurants, and non-store retailers. On the other side of the spectrum, multichannel retailers were leading the growth of e-commerce, serving customers who couldn’t access goods in stores.

When breaking down the growth in sales the online sector experienced, it becomes clear what lies ahead for shop owners and retailers. Online household good sales rose by 73.9 percent, online department store sales increased by 65.9 percent, and ‘other’ stores, encompassing everything from online jewellery stores to bookshops, saw 73.3 percent year over year growth.

Non-Digital Factors Killing Brick and Mortar

The ease of use and quick shipping advancements expected from online retailers, mixed with the move to digital spaces from pandemic-based health fears, aren’t the only factors at play hurting traditional retailers. The New York Times identified some unexpected elements that are also contributing, in this case, specifically why malls all across America are failing. Written before the pandemic increased the speed of online adoption, these factors show the depth of the crisis brick and mortar stores have been facing for a while now.

America had a strong consumer economy in 2019, yet that year still set the record for most retail stores closed at over 9,000. The data from 2020 is not yet known, but the economic instability faced across the country can surely only exacerbate this trend to its highest levels in history. Even legacy store brands like Macy’s struggled, closing 125 retail stores in 2019, before the pains they must have experienced in 2020.

No matter which way you look at it, even without the pandemic redefining health norms and standards for shopping, the online retail trend has established itself with no signs of slowing down. It has never been easier to order a product or service online, and with more money moving to the digital sphere, this is unlikely to change in the foreseeable future.