Coronavirus Widens Gap Between Retail Stores and Non-Consumers This Holiday Season

As the coronavirus has shaken consumer behavior this year, the holiday season was no exception.

As home shoppers shop online more than ever, e-commerce giant Amazon

AMZN
Monday reported a “record breaking” holiday season. Some of the season’s best-selling items on its site, including the classic Jenga game and the retro Lite-Brite toy, also showcased consumers’ hook mentality.

The happy season at Seattle powerhouse reflected the larger division in the industry. As consumers have started shopping earlier than ever, with the start of the season unofficially marked with Amazon Prime Day in mid-October, data from Mastercard SpendingPulse has shown holiday retail sales. excluding auto and gasoline purchases rose 3% between October 11 and December 24, driven by a 49% increase in online spending. E-commerce reached nearly a fifth of total retail sales, up from 13.4% in 2019, according to MasterCard

MY
, which tracks general retail spending trends for all payment types, including cash and checks.

Physical retailers like Walmart

WMT
and target

TGT
who have turned their sizeable fleet of physical stores into online fulfillment centers with in-store or curbside pickup offers have likely gained traction this holiday season as well. Year-over-year street pickup transactions nearly doubled between Nov. 1 and Dec. 9 to represent 23% of all online orders, according to Adobe.

ADBE
Analytic. He expected these transactions to represent half of all online orders after the December 11 shipping deadline. Retailers who launched the service also converted more online browsers to buyers than those who didn’t, Adobe said.

“Covid-19 has accelerated the internet switchover in 2020 and we anticipate further disruption in the future,” investment bank UBS said in a report this month, adding that the change could affect hundreds of stocks US dollars worth about $ 8 trillion. Online, it will grow to 31 percent of U.S. retail sales by 2024 compared to its previous forecast of 20 percent by 2020, UBS said. UBS also raised its forecast for average annual growth in five-year online sales to 12% from 11%.

“One of the enduring results of COVID-19 is that it has inspired wider digital adoption, especially in older cohorts,” UBS said, adding that its findings were based on an exclusive seven-year survey. among American consumers.

Gains made by companies like Amazon and likely physical retailers, from Walmart and Costco to Home Depot

HD
and Best Buy

BBY
marked a stark contrast to department stores and other retailers that neither serve as a one-stop shop nor serve the needs of consumers at home.

Furniture and home furnishings sales increased 16%; home improvement sales increased 14%; grocery sales grew by almost 7%; and electronics and appliance sales climbed 6% over the 75-day holiday season, followed by MasterCard SpendingPulse. On the other hand, data from MasterCard showed that department store sales fell 10%; clothing sales fell 19%; and sales of non-jewelry luxury items fell 21%. Jewelery sales fell 4.3%.

The gulf between winners and losers has led to a spate of store closures and bankruptcies, with major cities like New York City losing tourists and office commuters bearing the brunt. More than 40 major retailers have declared bankruptcy and more than 11,000 stores have been announced to close in the United States this year, according to commercial real estate data company CoStar Group.

CSGP
.

Along with the coronavirus restrictions, restaurants have also been among the hardest hit. More than 110,000 establishments, or 17% of restaurants, are closed permanently or long-term, according to a November survey by the National Restaurant Association. Food services and drinking places, once outclassed in the industry, saw their sales from this year to November drop 19%, with the rate of decline only surpassed by a nearly 29% drop in clothing and clothing accessories stores, according to US Department of Commerce November retail sales. report released this month. Online sales jumped 23%, according to government data.

But do not sound the death knell for brick and mortar yet. A case in point, Läderach, a major Swiss chocolate retailer, recently opened a New York flagship to bet against naysayers. In the days leading up to Christmas, crowds of last-minute shoppers can be seen in Herald Square in New York City and other shopping districts. Pedestrian traffic to 10 major retailers including Walmart, Macy’s

M
, TJ Maxx and Dollar General

DG
was up 18% on Super Saturday weekend, or the weekend before Christmas, compared to Black Friday weekend, according to industry tracker Placer.ai.

“Stores still have their place,” the UBS report says. Consumers said they “always buy in stores to see and try products and because they enjoy the experience.”

Related on Forbes: New coronavirus restrictions deal another big blow to many restaurants this holiday season

Related on Forbes: How Peloton’s $ 420 million deal with Precor will grow its business