Industry Focus Q2 2021: Retail

Article from MHI Solutions Magazine

One of the first casualties of the COVID-19 pandemic was in-person shopping. With mandatory shutdowns of non-essential retail and customers fearful about being in public, necessities moved to e-commerce.

As the pandemic lingered, it shifted habits in ways that aren’t necessarily changing back.

“People are saying, ‘When are we going to get back to normal?’ That’s like talking about when do we go back to horse and buggies?” said Jim Tompkins, founder and chairman for MHI member Tompkins International. “It ain’t going to happen.”

Tompkins believes we are in a phase that he coined “next retail.” No surprise that focuses more heavily on online shopping.

During the pandemic, the shifts to e-commerce were significant. Even Boomers are increasingly OK with online shopping, thanks to stay-at-home mandates and social distancing requirements. National Retail Federation research from the summer showed that 45% of Boomers say they were shopping online more. That is a sizeable opportunity, given that 82% of Boomers said this was not their preferred method of shopping.

The holiday season punctuated that. According to the National Retail Federation (NRF), online spending was up 23.9% during the holiday shopping season; overall retail was up 8.5%. Brick-and-mortar retailers benefited from shipping challenges. Many online retailers warned of an inability to guarantee delivery after the second week in December. NRF reports that consumers turned to quick store trips, often buying online and picking up in store, or using curbside services.

It is clear that online is playing a bigger role in overall retail sales. According to U.S. Census data, in the third quarter of 2020, overall retail sales dropped 0.6% from the previous quarter. E-commerce, however, was up 37.1% over the same quarter of 2019 and accounted for 13.5% of total sales.

Kevin Reader, director of business development and marketing for MHI member KNAPP, Inc, believes the pandemic is “the primary market driver of a five-year leap ahead in e-commerce.”

While the numbers certainly are there, what isn’t clear—yet at least—is exactly how this will impact the supply chain broadly and material handling more specifically.

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