Pandemic Speeds Americans’ Embrace of Digital Commerce

PG doesn’t usually post excerpts of more than one Wall Street Journal each day, but thinks this one includes important information that, among other things, does not bode well for traditional bookstores and (he suspects) physical books.

From The Wall Street Journal:

Brooke Mallers recently bought a used car online, she uses food and grocery delivery services more and she makes telehealth appointments—new habits that she expects to last long after the coronavirus pandemic is over.

“I’m not sure I’ll ever go into a car dealership again,” said the 58-year-old retired investor in Boulder, Colo. “It was fun to have an experience that’s new and the internet enables.”

The pandemic’s disruptions have transformed how American consumers behave by accelerating their embrace of digital commerce, and the changes are likely to prove permanent, according to businesses studying and adapting to the changes.

A recent survey by consulting firm McKinsey & Co. found that about three out of four people have tried a new shopping method due to the coronavirus and that more than half of all consumers intend to continue using curbside pickup and grocery-delivery services after the pandemic is over. Nearly 70% of consumers surveyed intend to continue buying online for store pickup.

The pandemic collapsed into three months a process of adopting e-commerce that otherwise would have taken 10 years in the U.S., the firm concluded.

. . . .

The lockdowns, social distancing and other effects of the crisis forced many consumers to try online shopping, medical appointments, yoga classes and tutoring services. And people new to the e-commerce game are “finding out it’s pretty useful,” said Brian Ruwadi, a senior partner at McKinsey.

This spurred businesses to step up their digital services. “You see significant movement on both sides, and that has to result in a significant increase, a fundamental shift in acceleration,” he said of the changes in business and consumer behavior.

“Consumers won’t go back to shopping the way they did before the pandemic,” said Stefan Larsson, the president of Calvin Klein and Tommy Hilfiger parent PVH Corp. “They will go forward into the new normal.”

. . . .

The rapid transition has positioned some businesses to thrive and grow, while others struggle or fail, reflecting the broader economy’s K-shaped recovery. Among the winners are those facilitating the shifts, including online retailers and service providers, technology firms and companies delivering the goods people are buying online. Peloton Interactive Inc. said its revenue more than tripled to $757.9 million in the September quarter. The company is capitalizing on surging demand for at-home fitness equipment, much of it internet-connected like its exercise bikes.

Faltering businesses include those unable to make the transition, such as many restaurants and bricks-and-mortar stores. Retail-store closings in the U.S. reached a record in the first half of 2020, and the year is on pace for record bankruptcies and liquidations, according to a report on the downturn’s severity.

Some pandemic-driven changes in what people spend money on may prove temporary, such as the shift away from activities requiring proximity to other people. With many Americans still shunning air travel and indoor dining, and with entertainment ticket windows still dark from Disneyland Park to Broadway, consumers spent 7.2% less on services in the third quarter than a year before. That left money to boost purchases of goods by 6.9% over the same period. But much of this could reverse once the virus is subdued.

Meantime, the change in how they buy things looks more lasting and spans generations.

“I will never go to a grocery store again in my life because it’s just so convenient and easy” to shop online, said Allan Schilter, an 81-year-old retired accountant in Springfield, Mo.

Mr. Schilter picks up his groceries curbside at Walmart, after ordering them online. “It’s safer; you don’t have to go into the store.”

E-commerce’s share of U.S. retail sales rose to 16.1% in the second quarter of this year, from 10.8% a year earlier and 0.9% of total retail sales two decades ago, according to the Commerce Department.

. . . .

Emily Kennedy said she is glad the pandemic prompted her to start ordering groceries.

“Being forced into that situation made me realize how much time I was spending every week walking those aisles,” said Ms. Kennedy, president of Marinus Analytics, an artificial-intelligence company. “People are realizing the time they save and the money they save,” said the 30-year old, who lives near Denver. “Once they get it, they’re reluctant to give it back later on.”

Shifts in consumer behavior are driving development of new distribution methods, such as online-only stores, or “dark stores,” where online purchases are gathered by workers for distribution to customers. Shoppers aren’t allowed in to browse the shelves or squeeze the fruit.

Link to the rest at The Wall Street Journal (PG apologizes for the paywall, but hasn’t figured out a way around it.)

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