Five years of progress in 9 months
Since the beginning of the pandemic, the rate of adoption of technology has greatly increased. The transformation from physical to an digital economy is one of the changes I've written about most on this blog and it's been discussed widely in the media. Based on a new report from IBM, the pandemic shifted technology five years into the future.
According to new data from IBM’s U.S. Retail Index, the pandemic has accelerated the shift away from physical stores to digital shopping by roughly five years. Department stores, as a result, are seeing significant declines. In the first quarter of 2020, department store sales and those from other “non-essential” retailers declined by 25%. This grew to a 75% decline in the second quarter.
The report indicates that department stores are expected to decline by over 60% for the full year. Meanwhile, e-commerce is projected to grow by nearly 20% in 2020.
For those already expecting these results, the [breakdown in spending per category is more insightful}(https://techcrunch.com/2020/08/24/covid-19-pandemic-accelerated-shift-to-e-commerce-by-5-years-new-report-says/). Per Techcruch:
The pandemic has also helped refine which categories of goods consumers feel are essential, the study found. Clothing, for example, declined in importance as more consumers began working and schooling from home, as well as social distancing under government lockdowns. However, other categories, including groceries, alcohol and home improvement materials, accelerated, by 12%, 16% and 14%, respectively.
The businesses hurting most are those not utilizing ecommerce and online platforms well. Surprisingly, per a Census Bureau survey of small businesses:
The Census added a new question in phase 2 asking whether or not small businesses had increased their use of online platforms and marketplaces since the beginning of the pandemic.
As the Census chart below (click to enlarge) shows, only 25% of the SMBs surveyed said they increased their use of online platforms, while 35% said they had not increased their use. 45% said they didn't use online platforms in their business.
The pandemic hit local businesses hard. Some have shifted to digital means and are finding success via ecommerce. Many have yet to implement technology solutions that may save their businesses. It would have been best to make the shift years ago, and the next best time is now.