The End of Brick-and-Mortar Retail? The Dominance of E-Commerce During the Pandemic and Beyond

Unicast writing analyst Mostafa Hegab on e-commerce’s rise during the Coronavirus pandemic and if it’s dominance over traditional retail will last into future

It is no secret that ever since the Covid-19 outbreak turned into a global pandemic, online shopping has become a much more regular activity for people. As the months continue to go by, many have come to the realization that online shopping is the new normal. It’s proven to be convenient, easy, somewhat cheaper, and for many, even a form of recreation. This convenience, however, also comes with an interesting question: what will happen to traditional brick-and-mortar retail? 

Firstly, it must be made clear that the rise of e-commerce in retail predates the Coronavirus pandemic by quite a few years. For example, after losing $4 billion since 2010, the American department store chain J.C. Penney filed for bankruptcy, closing many of its stores and cutting 1,000 jobs. Similarly, Debenhams, a well-known retailer in the UK, also filed for administration in 2020, which led to the closure of 22 of its stores.

In contrast, e-commerce has been booming for the past decade. A Plytix study shows that global e-commerce sales have grown from $572 billion in 2010 to $3.5 trillion dollars in 2019. So, many would claim that Covid-19 did not begin the decline of brick-and-mortar retail, but simply accelerated it. 

Before understanding whether the pandemic is the straw that broke the camel’s back, we must first understand the severity of brick-and-mortar retail’s decline. Luckily, there has been no shortage of data on this topic. A Statistics Canada study highlights that while total retail sales fell by 18% from February to May 2020 in Canada, retail e-commerce sales have risen by 99% within the same time frame.

Another study conducted by the United Nations Conference on Trade and Development found that e-commerce’s share of global retail trade has risen from 14% in 2019 to approximately 17% in 2020. These statistics, though quite significant, are not shocking. It should come as no surprise that, during a period where human contact could mean infection, e-commerce transitioned from an option to becoming an essential form of shopping.

The question now is whether the world has found a profound comfort in online shopping through the pandemic, or whether classic brick-and-mortar retail can bounce back. In her recent interview with Unicast Entertainment, Tessa Clarke, co-founder of the OLIO food sharing app, believes that there is a chance for local retail stores to thrive after the pandemic has been alleviated:

“I believe now that with more and more people living and working locally, they’re wanting to invest and be part of and support their local community and local businesses. I think the other change that we’re going to see is really a reinvention of the high street…to actually much more of an entertainment and experience type model”

It is worth mentioning that we are only at the beginning of the world’s recovery from the Covid-19 pandemic. Therefore, we have only seen months of a relatively sharp decline for brick-and-mortar retail, but not much for its recovery. However, with the little amount of time we’ve had thus far, some recovery can be seen. Calvin Schnure, a contributor for Forbes, believes that brick-and-mortar is “bouncing back”, as he underscores that the e-commerce share has shown retreat from December 2020 to February 2021. As the months go by and an increasing share of the global population gets vaccinated, it is possible to predict that brick-and-mortar will be seeing a strong recovery in the coming months. 

Watch Tesse Clarke’s full interview with Unicast Entertainment here.