(Article from the City of Dunedin)
These 4 Retail Groups With Bad E-Commerce Businesses Are Paying The Price As Coronavirus Pushes Shoppers Online
No one knows what will happen next with the coronavirus crisis, but when it comes to how Americans are shopping, there is one thing of total and utmost certainty: Online retailing will gain market share and become much more popular.
That irrefutable outcome of the pandemic will make retailers that have never truly developed e-commerce capabilities—or, worse, walked away from the channel—do a 180-degree turn and put a massive push behind getting their online operations into competitive shape.
Although most national retailers have been in the e-commerce game for decades, it’s fair to say that few of them have their acts totally together. While Walmart and Target on the discount side, Macy’s in department stores and specialty retailers like Best Buy, Williams Sonoma, RH and the Gap brands have healthy online businesses, other sectors are far behind in building their e-commerce sales. Amazon’s expanded business over the past few weeks is one more piece of proof.
As the coronavirus has caused the shutdown of more than 150 retailing companies’ complete brick-and-mortar operations and countless more individual units based on geography and format, retailers that depended on them for the vast majority of their sales are finding their revenues at a virtual hard stop. Without online to fall back on, they may be waiting weeks—some suggest longer—to be able to get back into business. For some, that will be too long, and for those that have been teetering on the business edge, this could be the final straw to push them into insolvency.
But there are entire sectors of the retail business that are vulnerable right now, and these are the ones that must be rethinking their business strategies:
- Off-price stores—from the TJX brands like Marshalls, TJ Maxx and Home Goods to Ross Dress for Less and other, smaller companies—have largely avoided e-commerce. It represents a tiny part of the TJX mix, and Ross doesn’t even sell online. Worse, another big national player, Burlington, announced just before the coronavirus outbreak that it was shutting down its nascent e-commerce operation. While their physical merchandising model may not translate well online, all of these retailers will need to find a way to do digital business.
- Deep-discount grocery retailers Aldi and Lidl have no online capabilities at all. As they continue to gain share in physical stores, they are totally non-competitive with Walmart, Kroger, and regional supermarket chains. That has made them especially vulnerable now. Even if they offer curbside pickup, it’s not enough considering customer needs and expectations today.
- Dollar stores, notably Dollar Tree and its Family Dollar brand as well as chief competitive Dollar General, have largely failed to develop e-commerce capabilities. Years ago, they used to say their customers didn’t go online or didn’t have credit cards, but that’s no longer the case. As they attract mainstream shoppers from across income and social spectrums, they will be hurt by not being online.
- Independent specialty retailers, no matter what the product category, have had a love-hate relationship with e-commerce almost since its beginning. Without the resources—physical, digital or manpower—to service online business, they have given it lip service or perhaps used third-party service providers that provided perfunctory presences. For these independents, this is the day they must take their online businesses seriously and give them the attention they need to be successful.
There are also countless individual retailers in many channels—home improvement, furniture, floor coverings, footwear—that are very much behind the curve in their e-commerce efforts. Some of this is due to the nature of the products they sell, but today’s consumer has proven they will buy just about anything online, from $100,000 automobiles to the most luxurious of luxury products. There is no longer a category that doesn’t belong online.
All of these developments were in the works before the pandemic, and the transitions needed by both entire sectors and individual companies to ramp up online would have happened eventually. But the coronavirus has sped up the process and put those slow to the gate in deep danger. Millions of shoppers who would have never considered shopping online have been forced to do so, and it’s quite likely most will like the experience and come back for more.
The coronavirus will eventually subside as all pandemics do. But the move to online shopping will continue to spread—it’s unstoppable. Eventually, those retail businesses without the right treatment will not survive.