The retail apocalypse didn’t happen last year, despite the coverage
If there was a retailing equivalent of a swear jar (put in a dollar for every curse word) then it should be used for the phrase “retail apocalypse.” (Dang, there goes a George.)
As a recent article written by Bob Phibbs, AKA the Retail Doctor and a RetailWire Braintrust panelist points out, the offending phrase was never accurate and it still isn’t after almost a year during which U.S. retailers had to deal with the effects of the novel coronavirus pandemic.
The article contends that much of the financial and trade media went into Chicken Little coverage mode early in the pandemic. An early forecast by Coresight Research estimated that up to 25,000 stores would permanently close due to the pandemic.
Coresight’s forecast, it turns out, was vastly overstated, which means the worst year ever predicted for retail never happened. An article last month by Deborah Weinswig, founder and CEO of Coresight, acknowledged the estimate “based on our analysts’ experience in tracking store closures and our substantial historical data sets” was wrong.
The reality, according to Coresight, was that 8,721 stores were permanently shuttered in 2020, fewer than the 9,832 that closed in 2019. That’s not to discount the large number of stores that closed last year but only to point out that many of those were on shaky ground before the pandemic.
Mr. Phibbs cites dozens of statistical sources for how one piece of content shaped the narrative about the death of retail and supporting his belief that 2021 will be a better year for retailing than the one that just passed.
Mastercard SpendingPulse reported that online and in-store transactions it tracked were up three percent during the holidays, exceeding its own 2.4 percent forecasted gain.
Looking ahead, the Congressional Budget Office estimates that the U.S. economy will grow 4.6 percent his year, the fastest increase since 1999. The prospect of vaccinated Americans and other protective measures makes it more likely than not that good times are ahead for the retailing industry.
Online sales grew from 13 percent in 2019 to 20 percent last year, according to Mastercard’s numbers, not 30 percent as was widely shared in a McKinsey report. That means, Mr. Phibbs explains, that 80 percent of all sales took place in stores. Don’t be in a rush to turn out the lights and lock those doors just yet.
- Shaking Off the Retail Apocalypse With Hope and Real Data – Bob Phibbs, The Retail Doctor
- US Store Closures 2020 Outlook: Coronavirus Outbreak Set To Trigger Unprecedented Number of Closures – Coresight Research
- Why Didn’t 25,000 US Stores Close in 2020? – Coresight Research
- Holiday retail sales rose 3%, driven by online shoppers – Fortune
- Economy to grow at fastest pace since 1999, says Congressional Budget Office – MarketWatch
DISCUSSION QUESTIONS: Do we place too much emphasis on what might happen and less accountability on what did when it comes to retail predictions? Do you expect a good year for retail in 2021 and in-store experiences?