Wednesday June 10, 2020 |Notes

Local retail has peaked

Physical retail has peaked for the foreseeable future. In fact, it's unlikely to return to pre-pandemic levels without a new significant change in our trends over the course of the next decade. The end of the coronavirus pandemic will not bring an immediate return to how things were in 2019 and many changes will prove irreversible.

There's a new report from eMarketer out suggesting that ecommerce sales will grow by 18% this year. This is a huge surge and it will still not make up for the loss in overall retail sales. Overall, the study expects a 10.5% reduction in overall retail spending in 2020, which would bring it back to 2016 levels.

Physical stores are hurting and will continue to feel the pressure of digital commerce that was making business difficult before the pandemic. The digital shopping experience is great and getting better. Because of the surges, companies are investing in improving better ecommerce experiences, as well as fulfillment and delivery.

A handful of large retailers have already closed entirely (jc penney, neiman marcus, pier one) while other retailers have closed droves of stores (l brands, nordstrom). And of course, smaller retailers are feeling the pain and many have already closed. As more jobs are cut, overall retail spending will decrease further with less cash to go around. And with retail stores closing, the number of potential shopping outlets will decrease, leaving fewer physical retail options.

Not all physical retail will close of course. It does suggest the local commerce market is shrinking and looking like less of an opportunity than digital commerce.

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