Despite what you have heard, physical trading has not returned

If you’ve been following the news, you’ve probably noticed a lot of headlines announcing the return of retail. Earlier this week, the New York Times even praised the return of shopping malls.

There’s only one problem. If you think retail is suddenly back, you’ve been ignoring what has been true for almost three years.

As many of us remember well, the depth of the Covid-19 crisis resulted in mass store closures for many weeks. Even after most stores reopened, consumers were initially slow to return to previous shopping patterns. But the facts are stubborn – and the data shows that when physical retail went anywhere, in most cases it came back quite quickly and often with a vengeance.

As EMarketer data shows, in 2020 there was actually – all things considered – a rather small decline in sales at stationary locations. However, sales increased significantly in 2021, well above 2019 levels. In 2022, overall store sales continued to increase, exceeding 2020 levels by more than 15%.

To put things in perspective, by the end of 2021, many store traffic metrics had returned to pre-pandemic levels. Moreover, store openings continued to be high for many retailers throughout the post-pandemic period, with total openings outpacing closures in both 2022 and 2023.

To be clear, as with many aspects of retail, we continue to see a bifurcation pattern. The so-called shopping centers The A’s are doing well while many lower-end centers continue to struggle long-term. Most brands’ suburban locations typically significantly outperform their urban counterparts. In a pattern that emerged before the COVID pandemic, store closures and bankruptcies are largely concentrated among retailers trapped in the unremarkable middle of the market. While retailers with distinctive and highly relevant customer value propositions continue to open stores and generate significant revenue growth.

This phenomenon is nothing new. It was clear if that was what you were looking for while ignoring unreliable narrators. Ask unusual retailers whether physical retail has returned and the vast majority will tell you they were only in hibernation for a very short period of time.

It is also important to highlight the often important and growing role that physical locations play in facilitating the growth of online commerce, which has (and will) continue to significantly outpace store growth. Physical locations help drive e-commerce demand and are often key to fulfilling orders directly from store, with local home delivery or for customers opting for click and collect.

Before the pandemic, retailers like Walmart, Target and Best Buy viewed their stores as assets that could be leveraged to deliver hybrid and harmonized shopping experiences across all channels. As such, they were already increasing their brick-and-mortar investments while far too many competitors bought into the retail apocalypse nonsense and withdrew similar efforts.

The lesson here – as I wrote in my first book and have been talking about for almost a decade – is that the death of physical retail is still greatly exaggerated. Physical sales are definitely different. And it will continue to increase the share of e-commerce. But he is far from dead. Ignore this at your own risk.