A Comeback for Physical Stores

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Americans shop online like crazy during an epidemic, right? Motivated by fear or convenience, most of us became comfortable clicking “buy” from our sofa – including buying a sofa – and not going back.

That’s right. And also, well … no? Or maybe?

The latest US government data shows something that surprised me: Physical stores beat online shopping in 2021. No kidding.

The Commerce Department said Friday that Americans spent 18 percent more on food, cars, furniture, electronics and other retail products last year than in 2020. Online retail sales are up 14 percent. In other words, e-commerce lost ground to brick-and-mortar stores last year.

Admittedly, 2021 was a fantastic year for shopping. There was a plea for more of us to browse face to face than we did in the scary first month of Covid in the U.S. and prices and scarcity changed what people bought and where they bought. And one year cannot change the long-term trend that online shopping is capturing more wallets of Americans.

But the return to physical stores also points to the speed at which technologies change our behavior and how difficult it can be to predict the effects of if and when they do. The future does not have to be in a straight line.

My point is not limited to shopping. One of the big debates for our economy and life is that coronavirus and the accompanying digital adaptation can permanently change all aspects of how we spend our time, including the future of office work, going to the movies and the habit of exercising. The honest answer is that we don’t really know. Much has changed, but not much has changed.

Brian Weiser is one of my favorite number one students, and he warned me about the fact that physical stores won in 2021. Viser, global president of business intelligence for advertising firm GroupM, said he would prefer to zoom out in two-in. A year of time to assess the disruptive effects of epidemics on businesses and us.

Viser described what he saw as a “new highland” – the epidemic accelerated digital trends that were already happening and kicked our use to a higher level. Many people who have researched human behavior have similarly talked about ways to become familiar with e-commerce, remote work, telemedicine, and online socialization that may not have occurred in the absence of an epidemic by 2025 or later.

Weiser’s data crunch shows that we have increased our online purchases more in 2020 and 2021 than in any two-year period since 2006. Amazon and Walmart have also encouraged their investors to look at a two-year period. On Amazon, this may be partly driven by futile sales. During the last six months of 2021, Amazon reported the slowest rate of revenue growth in 20 years.

The founder of e-commerce research firm Marketplace Pulse, Joozas Kazyuknas, asked me a question a few months ago that I can’t forget: Does coronavirus really force us to buy more online – or just to buy more, period?

This is a confusing time to evaluate what technology has changed in us. The visor’s metaphor for the highlands is useful. Perhaps we have reached a new level of familiarity and use with technology. That doesn’t mean we can predict where we will go from this new perch.

We (myself included) are still terrified of predicting the future of technology and of how people and society respond to it. Sometimes a new app that we can’t stop talking about is Instagram, and sometimes it’s Ello. (Don’t remember Elo? OK.)

And human behavior can change slowly, as long as it swamps us. We would think that online shopping is ubiquitous, but even now more than 85 cents of every retail dollar in the US is spent in physical stores.

So what is it Is online shopping the future of how we buy and change everything or is it a relatively small change that is having a huge ripple effect. Yes.

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a The North American raccoon bears his doggie buddyI’m imagining a sweet backstory for both of these.

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