A Comeback for Physical Stores

March 1, 2022

read the full article here (paywall)

Americans shopped online like crazy during the pandemic, right? Motivated by fear or convenience, more of us grew comfortable clicking “buy” from our sofas — including to buy sofas — and there’s no turning back.

Fresh data from the U.S. government shows something that surprised me: Physical stores beat online shopping in 2021. No joke.

Americans spent 18 percent more on food, cars, furniture, electronics and other retail products last year compared with 2020, the Commerce Department disclosed on Friday. Online retail sales increased by 14 percent. In other words, e-commerce lost ground last year to brick-and-mortar stores.

Admittedly, 2021 was a strange year for shopping. More of us had the urge to browse in person than we did in the scary first months of Covid in the U.S. Climbing prices and shortages changed what people bought and where they shopped. And one year doesn’t alter the long-term trend that online shopping is grabbing more of Americans’ wallets.

But the comeback for physical stores also points to how difficult it can be to predict the speed at which technologies alter our behaviors and the effects if and when they do. The future does not necessarily arrive in a straight line.

Data crunching shows that we increased our shopping online more in 2020 and 2021 than we had in any two-year period since 2006. Amazon and Walmart have also encouraged their investors to look at two-year chunks of time. At Amazon, this may have been motivated in part by lackluster sales. During the last six months of 2021, Amazon showed the slowest rate of revenue growth in 20 years.

And human behavior can change slowly, until the point when it swamps us. We might feel as though online shopping were ubiquitous, but even now more than 85 cents of each retail dollar in the U.S. is spent in physical stores.

So which is it? Is online shopping the future of how we buy and change everything or is it a relatively small change that is having mammoth ripple effects. Yes.

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