Urbanism Next
University of OregonUniversity of Oregon

E-Commerce & Retail

Photo by Carlos de Toro @carlosdetoro on Unsplash

What We’re Seeing Now:

Retail sales are rebounding. In May, retail sales including in-store, restaurant and online sales, rose 18% vs April. Reflecting the regional re-openings, in-store traffic is trending up (down 63% YOY for the month of May vs. 85% in April). By category, apparel continues to show the largest decline in store traffic (down 93% YOY for the month of May).

Brick-and-Mortar stores adapt to e-commerce adoption: Brick-and-mortar stores of all sizes are experimenting with e-commerce as a replacement or supplement to their physical store. During stay-at-home orders, mom-and-pop retailers began using services like Shopify to shift to online sales. Between March 13 and April 24, new online stores powered by Shopify increased 62%. Among big box chain retailers and grocery stores, click-and-collect and reallocation of stores to fulfill online orders has accelerated.  In April 2020, Bed Bath & Beyond converted 25% of its stores to regional fulfillment centers. Online grocery sales rose 65% from March to May 2020 but retailers remain wary due to operational complications and high costs.

Reopenings come too late for some retailers. Shutdowns have hit already ailing department stores hard and has resulted in store closures, layoffs, financial restructuring, and bankruptcy filings from J.Crew and Neiman Marcus. Small businesses are particularly vulnerable to the extended closures. In early April, 1 in 4 small businesses said their business was at risk of closing permanently after 1-2 months of the current disruptions and 1 in 3 were at risk after 3-5 months. Black owned small businesses have been disproportionately impacted by shutdowns; between February 2020 and April 2020 the amount of working Black business owners plummeted by 41%, compared with 22% for all small business owners.

Expanded e-commerce buying behavior remains as stores reopen. In response to rapidly shifting COVID-19 public health recommendations and low inventory on store shelves in the early days of the pandemic, people have expanded their e-commerce purchases beyond the normally popular categories of consumer electronics and apparel. As of the end of May with many states partially reopened, more than 1 in 4 report shifting to online purchase of restaurant meals, hygiene products, household cleaning products, and food and drink from grocery stores in response to the pandemic. According to Mastercard, e-commerce purchases made up 22% of all retail purchases in April and May, up from 11% in 2019.

Rapid deployment of e-commerce services raises accessibility issues. While many people have opted to online shop rather than brave the stores, many others don’t have this option. Barriers related to technology (internet access, unlimited mobile data), finances (unbanked, lack of credit cards), language and visual impairment limits the accessibility of e-commerce. Many e-commerce websites do not meet ADA standards, creating additional barriers and challenges for people with disabilities to access their services.

Potential Long-term Issues and Questions:

As stay-at-home orders lift and supply chains stabilize, what will people learn from the new shopping behaviors that emerged during the pandemic? Will the experimental e-commerce behaviors stick? What will it take for people to trust visiting essential and non-essential stores? Will the strength of experiential shopping centers hold? Much of this depends on how long stay-at-home orders are in effect and will vary regionally.

How can policies support small, local businesses that provide much needed jobs and community vitality? With higher cash reserves and better access to banks and government bailouts, big chain retailers have a strong advantage over local, independent retailers in weathering the upcoming phases of reopening (retraining workers, adapting store designs, enhancing e-commerce offerings).  If small businesses don’t make it, what happens to the unique character of commercial districts and main streets? How will land use and retail markets fill this void?  

With COVID-19 intensifying the headwinds for department stores, how will malls repurpose these massive empty stores and support the remaining businesses? According to a January 2020 report by Green Street Advisors, department stores make up 30% of the total mall square footage in the US and 50% are predicted to close within the next 5 years.