NEW YORK — COVID-19 is accelerating the already rapidly changing world of retail economics, analysts said.
They say J. Crew’s bankruptcy will likely be one of many as bigger chains adapt to how people shop and the jobs needed to fulfill those needs. The sector was already in flux with at least 140,000 retail jobs lost from 2017-2019 in the United States.
NYU Stern School of Business Professor Russell Winer said the pandemic did not create retail problems, it just exposed already vulnerable companies.
“I view the COVID-19 crisis as an accelerator,” Winer said. “The brands having trouble before, are going to continue to have trouble.
Generally, companies were still adjusting to e-commerce well before social distancing and the desire for more on-demand delivery.
According to Digital Commerce 360, which analyzed U.S. Commerce data on items easily purchased online, only 5.6% of those purchases were made online in 2009. In 2019 that number had spiked to 16%, with a trillion more dollars being spent overall.
Winer points to the still large number of in-person purchases. He and other economists do not think in-person retail or retail jobs will go away; however, many of the jobs will have to become more consumer service focused.
“The winners are going to be those that are providing great retail experiences,” he said. “At the low end: good value, or on the high end: great experience where you get good help in person or on the phone.”
Companies will likely scale back traditional positions and build up robust call center and fulfillment center resources. Bankruptcies will likely accelerate that shift according to Brian Marks at the University of New Haven College of Business. Marks thinks more companies have “pre-packaged” bankruptcy plans ready to go.
“J. Crew is not going to be the last firm to do that, we’re going to see many other firms,” Marks warns. “There’s going to be greater online presence… and some locations are going to shirk in size.”