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Analysts say E-Commerce Will Not Balance Out In-Store Sales Losses

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While few businesses can predict the course of the COVID-19 pandemic, retailers have the power to develop and roll out contingency plans to address the crisis and ensure business continuity, according to Bain & Company’s Situational Threat Report Index. The consulting firm says challenges for retailers will vary by sector.

For example, the grocery sector will need to scale up operations in-store and online to serve increasing customer demand. Other retail segments will see a reduction in traffic and revenue, Bain & Company reports.

Retailers like Macy’s are closing brick-and-mortar locations or are shortening hours like Target and Walgreens due to the spread of COVID-19. As a result, online brand protection company Red Points says 46.1 percent of consumers are more likely to purchase fashion, clothing and apparel online.

But is it enough to outweigh the in-store sales losses?

Financial services companies Wedbush Securities and Morgan Stanley don’t think so, according to Retail Dive, but the financial services companies also said they don’t expect a full-blown recession at this time. Wedbush analysts said that COVID-19’s impact on sales and profits “will prove transitory and will not top the economy into recession and by the second half of this year, pent-up demand could partially offset the pressures felt now.”

Bain & Company says all retailers need to deal with short-term disruption, but also be focused on medium-term planning for eventual recovery.

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