The retail apocalypse didn’t happen last year, despite the coverage

Discussion
Photo: RetailWire
Feb 05, 2021

If there was a retailing equivalent of a swear jar (put in a dollar for every curse word) then it should be used for the phrase “retail apocalypse.” (Dang, there goes a George.)

As a recent article written by Bob Phibbs, AKA the Retail Doctor and a RetailWire Braintrust panelist points out, the offending phrase was never accurate and it still isn’t after almost a year during which U.S. retailers had to deal with the effects of the novel coronavirus pandemic.

The article contends that much of the financial and trade media went into Chicken Little coverage mode early in the pandemic. An early forecast by Coresight Research estimated that up to 25,000 stores would permanently close due to the pandemic.

Coresight’s forecast, it turns out, was vastly overstated, which means the worst year ever predicted for retail never happened. An article last month by Deborah Weinswig, founder and CEO of Coresight, acknowledged the estimate “based on our analysts’ experience in tracking store closures and our substantial historical data sets” was wrong.

The reality, according to Coresight, was that 8,721 stores were permanently shuttered in 2020, fewer than the 9,832 that closed in 2019. That’s not to discount the large number of stores that closed last year but only to point out that many of those were on shaky ground before the pandemic.

Mr. Phibbs cites dozens of statistical sources for how one piece of content shaped the narrative about the death of retail and supporting his belief that 2021 will be a better year for retailing than the one that just passed.

Mastercard SpendingPulse reported that online and in-store transactions it tracked were up three percent during the holidays, exceeding its own 2.4 percent forecasted gain.

Looking ahead, the Congressional Budget Office estimates that the U.S. economy will grow 4.6 percent his year, the fastest increase since 1999. The prospect of vaccinated Americans and other protective measures makes it more likely than not that good times are ahead for the retailing industry.

Online sales grew from 13 percent in 2019 to 20 percent last year, according to Mastercard’s numbers, not 30 percent as was widely shared in a McKinsey report. That means, Mr. Phibbs explains, that 80 percent of all sales took place in stores. Don’t be in a rush to turn out the lights and lock those doors just yet.

DISCUSSION QUESTIONS: Do we place too much emphasis on what might happen and less accountability on what did when it comes to retail predictions? Do you expect a good year for retail in 2021 and in-store experiences?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"As the saying goes: you can’t stop the waves, but you can learn to surf them. And that’s exactly what strong retailers will be doing in 2021."
"No definition of retail apocalypse should be based on store counts...The U.S. could close 25 percent of all our retail space and STILL have more per person than anywhere else."
"Call it a paradigm shift or a Jurassic moment or whatever, but to not recognize it is denying what’s taking place."

Join the Discussion!

44 Comments on "The retail apocalypse didn’t happen last year, despite the coverage"


Sort by:   newest | oldest | most voted
David Naumann
BrainTrust
David Naumann
Marketing Strategy Lead - Retail, Travel & Distribution, Verizon
1 year 3 months ago

The “retail apocalypse” term has been overused for several years. Rather, what we have seen is a normal attrition of underperforming stores and debt ridden chains closing in recent years. This is a normal fact of business. There are always winners and losers. Retail weathered the pandemic much better than most suspected it would and there is still some pent up demand for fashion and luxury segments that should prove to have a better year in 2021 as more social and entertainment functions resume, albeit in a slightly revised fashion.

Mark Ryski
BrainTrust

Predictions are only guesses, so we can’t be too hard on prognosticators. These are opinions and it’s up to readers to decide what they believe will be true. What these results show is just how resilient brick-and-mortar retailing really is. And notwithstanding the fact that there have been many retail business failures this last year – many being attributed (rightly or wrongly) to the pandemic – it’s not all bad news and there are many examples of great success. I expect a solid bounce-back in the latter half of 2021 — and perhaps sooner if the pandemic can be brought under control.

Suresh Chaganti
BrainTrust

Clickbait headlines and catch phrases are an easy sell. It is harder to do primary research and then look for corroborative evidence. I am not specifically pointing at anyone, but it’s just the nature of the news and opinion cycles. For business news, it is even harder as there is always a lag of one or two quarters before official numbers are available. That means there is always a huge chance of underestimating or overestimating the impact.

Bob Phibbs
BrainTrust

As I note in the full article though, those initial claims that 25,000 could close were never updated and only revealed in a casual email.

Dr. Stephen Needel
BrainTrust

We always have apocalypses because that makes for a more compelling story than a few stores having issues. We see this too in predictions for the future. I’ve said before and I still believe that mostly we want to be back to normal after the pandemic, which for most of us means going to stores to shop. That desire will override our use of online.

Paula Rosenblum
BrainTrust

Forget about the term. Hundreds of thousands of independent retailers and restaurants closed last year. That’s pretty apocalyptic.

Just looking at the “majors” is like NRF declaring sales were up for the holiday season because they include grocery and don’t include restaurants.

It was a God awful year. Don’t kid yourselves.

Cathy Hotka
BrainTrust

Agreed. 2021 will be kind to those retailers who have resources and can grow their e-commerce capabilities. Retailers that decided last year to try to milk the last dime out of legacy systems won’t fare so well.

Nikki Baird
BrainTrust
As someone who has made a living on making predictions, I definitely agree that people are more interested in what *might* happen than what actually happened, and also simultaneously people are not interested in your accuracy as a gauge for whether they should listen to you talk about what might happen (see: political conspiracy theories). I can tell you from our own aggregated customer performance that store sales were down about 8 percent to 9 percent in 2020, which hides a huge quarterly swing. March and April were down over 50 percent, which means retailers (and remember these are mostly non-essential) made it all up in later months. They were up 5 percent to 10 percent year-over-year coming into the pandemic. But that’s just looking at stores. For retailers with strong online operations, their sales will be up that 2 percent to 3 percent, and for retailers with strong omnichannel operations where they can flex between online and stores for both demand and inventory, they will be up more than that. I think a store… Read more »
Bob Phibbs
BrainTrust

Thank you as always for your considered response, Nikki.

Neil Saunders
BrainTrust

2020 presented opportunities and challenges.

Some sectors and areas of retail did suffer. Restaurants had a very tough time. Department stores saw footfall plunge. Apparel sales were pretty weak. And some retail balance sheets were severely damaged.

However others areas thrived. Mass merchants, home improvement stores, and grocers had their best ever years. Online surged and many retailers adapted by introducing new services like curbside collections and ship from store. And even apparel retailers managed to improve margins as they reduced inventory and pulled back on discounting.

This polarization has been in play for a long time and one of the issues is that, very often, it is the negative that gets amplified. Good retailers will look for the positives and the opportunities.

As the saying goes: you can’t stop the waves, but you can learn to surf them. And that’s exactly what strong retailers will be doing in 2021.

Phil Rubin
BrainTrust
Phil Rubin
Founder, Grey Space Matters
1 year 3 months ago

No doubt that “apocalypse” was overly dramatic but as Paula points out, there are a lot of closures and even more that were prevented due to PPP and other relief mechanisms. And let’s be mindful of the vast number of Chapter 11 Bankruptcy filings that we’ve seen and the bailouts/infusions that saved countless other reorganizations.

How about Retail Darwinism as a better descriptor?

Gene Detroyer
BrainTrust

Yes, Retail Darwinism. That is how it should be.

Phil Rubin
BrainTrust
Phil Rubin
Founder, Grey Space Matters
1 year 3 months ago

Thanks Gene!

Paula Rosenblum
BrainTrust

I’m good with that.

Phil Rubin
BrainTrust
Phil Rubin
Founder, Grey Space Matters
1 year 3 months ago

Thanks Paula!

Gene Detroyer
BrainTrust
I gotta agree with Bob. “Apocalypse” is a total exaggeration. To me it brings to mind 90 percent or more, maybe even 100 percent of all retail going away. But it surely is a good word for the media. One wonders who those articles were written for. It strikes me that is not something a consumer would pay much attention to. Maybe it was written for us? But we know better. Back to reality — will a huge number of store closings continue? It started before the pandemic and will continue for years. Will retail ever grow beyond the rate of population growth plus inflation? Not likely, but it will surely continue to move from brick-and-mortar to online. And, even faster than the rate of store closings, the rate of square footage will rapidly diminish. If people get more money and jobs, there will be a nice bounce in 2021. But expect shoppers who have experienced the ease and convenience of online to suddenly spend a lot of time in stores.
Bob Phibbs
BrainTrust

It seems store closures by Coresight’s own measures average about 10,000 so isn’t that really the norm?

Gene Detroyer
BrainTrust

Exactly. The numbers in your article reminded me of an article I saw earlier this week regarding NYC and people moving out. The net loss for 2020 was 70,000 residents. Apocalypse? Well, the net loss for 2019 was about 140,000 residents, yet not an “apocalypse.”

Dick Seesel
BrainTrust

It’s true that many of the stores that closed multiple sites in 2020 were already in trouble, or were unable to adapt to new ways of shopping. (It’s also clear that the big box stores with the most robust omnichannel or biggest breadth of assortment fared the best — think Target, Walmart, and food retailers.) But more than one thing can be true at the same time.

There is no denying that thousands of independent retailers closed their doors last year — mostly because they had to shut down for an extended period of time, or couldn’t maintain their payroll given lack of demand. “Apocalypse” may be too strong a word (closer to the truth for the restaurant business), but 2020 was a difficult year for many. In every city where panelists live, I’m sure there are plenty of examples of retailers lost to the pandemic.

Georganne Bender
BrainTrust

What gets me is how gleefully the term “retail apocalypse” was thrown around last year and still is. It was bad enough when the media sunk its teeth into it and wouldn’t let go, but when those of us who know better share it without explanation it’s even worse. Yes, we lost a lot of retailers in 2020; big chains that had too many stores and independents that couldn’t weather the pandemic did indeed close. But many survived; some even thrived. How about we talk about that for a while? As Bob Phibbs points out in his article, the sky wasn’t ever truly falling.

Bob Phibbs
BrainTrust

Thanks Georganne. That’s why I took a month to find those 40 citations of how stories play out and what the effects of those stories had across the nation.

Ben Ball
Guest

As a member of the offending class (journalists, pundits and consultants) I hate to say it, but the simple truth is that no one makes any money telling us what has happened. And if we say, “the trajectory will not change” or “nothing has really changed at all” then no one bothers to read/engage us. It’s the profession’s equivalent of “if it bleeds it ledes.”

Bob Phibbs
BrainTrust

Yet where is the accountability then Ben? If no one really knows what is going to happen, isn’t that whole industry built on Sybil the Soothsayer style predictions from Network for drama?

Ben Ball
Guest

I apologize profusely if I implied that there was any veracity to those predictions. I kinda meant to imply the opposite.

Peter Charness
BrainTrust

The “store” has it’s place in retail, as does a cell phone, a fulfillment center, a Prime delivery truck, and a website. The balance between all of the mediums that shoppers use has changed dramatically. Predicting the number of stores and in-store experience is like looking at the door handles on a car and trying to determine how fast that car can go. Predicting what might happen has to also focus on relevant values — in this case total retail sales. Then the accountability on what did happen becomes useful.

Ricardo Belmar
BrainTrust
It’s time to bury the term “retail apocalypse.” For every year that it gets tossed around, we end up realizing there was nothing apocalyptic about the retail industry. Consumers still shop at stores. Yes they are buying more online, but how much of that newfound online spend results in a curbside or in-store pickup? Answer – plenty! To the surprise of almost no one, consumers still prefer to shop in-store and, as Bob Phibbs points out, that equates to 80 percent of sales in a pandemic year like 2020. I’ve said before that if e-commerce were truly going to take over the retail industry it would happen in 2020 if it were ever going to happen. Well, it didn’t. While there were many lessons everyone learned in 2020, one of the important ones is how hard it is to predict what shoppers will do by surveying them and how hard it is for all of us in the industry to predict what retailers will do. Agility was the theme of 2020 and resilience will be… Read more »
Steve Dennis
BrainTrust
As the great retail strategist Mark Twain has said, “reports of my death have been greatly exaggerated” and, as I said recently in a Forbes article and on the Remarkable Retail podcast: “Physical retail. Still not dead.” What’s been going on for years — and was accelerated by the COVID crisis — is both a hollowing out of the mediocre middle of retail (i.e., as I talk about in my book, unremarkable brands) and a correction to better balance the supply of retail space and the demand (caused by overbuilding and a shift to e-commerce). The undeniable fact is that brands with a strong value proposition are opening lots of stores. The reason Coresight missed the mark is largely due to government stimulus propping up demand (for now) and a better understanding of the role brick-and-mortar locations play in not only being places to buy things, but the key role they play in being advertising for a brand and fulfilling digital orders (be that curbside pickup, BOPIS or ship-from-store e-commerce). Two things can be true… Read more »
Lisa Goller
BrainTrust

As a retail trendspotter, I can say we try our best based on public reporting.

This week I reflected on my past predictions to hold myself accountable. For instance, my 2018 prediction that voice commerce purchases will explode by now missed the mark.

Here’s the thing: A 2021 trends piece I wrote felt anti-climactic. Beyond the booming home category, every trend on my list was “old news,” stretching back as far as 2014. (E-grocery, healthy, local, sustainable, etc.)

Now the pandemic is a catalyst that forces laggards to catch up to consumer and competitive trends to survive. Many trendspotters’ premature predictions are now coming true. That’s because it takes time for consumers and companies to change their entrenched habits.

Yes, 2021 will be a good year as retail rejuvenates and consolidates. E-commerce will mature and more stores will protect and pamper shoppers. The most agile, customer-centric companies will triumph.

Di Di Chan
BrainTrust

Many of these stories are not targeted at everyday readers or helping non-publically traded business leaders better understand and respond to what is going on in their industry. These kinds of anxious and urgent business analyses are often targeted at financial players and investors. For example, reading the news from the speculative financial market’s point of view, the marketing of the “retail apocalypse” could signal private equity players to grab a bigger piece of the retail pie by looking for struggling retailers and sweeping in on cheaper deals.

Lee Peterson
BrainTrust

True. The only “apocalypse-ING” that happened was going to happen anyway, as with the multitude of retailers that went bankrupt. It’s more like a seismic shift than destruction. The customer has many new options for purchasing from whomever and they’re choosing to use them. The retailers that got “apocalypsed” did not have the smarts or perhaps the wherewithal to shift with the customer. The huge shift that happened is not a new thing, innovation and movement has always been a part of the retail DNA.

Gary Sankary
BrainTrust

Being able to forecast business trends is essential. Being right, or at least “rightish,” is important for building sustainable businesses. Let’s be honest, 2020 was a disaster for the industry in general. In addition to the acceleration of the adoption of digital capabilities, there was also a pretty significant acceleration in the reallocation of wealth in retail from small/medium sized businesses, most of whom were working on digital commerce, but were way too slow and found themselves behind when the pandemic hit, and the larger, digitally savvy big guys who have had years of investments to leverage and turned them into outstanding results.
Those big guys, the success stories, may not have predicted the impact of a global pandemic, but they were savvy enough to understand the market was moving to more digital engagement and made the investments in those capabilities so when the pandemic hit, they were able to pivot successfully.

Joe Skorupa
BrainTrust

Coresight got its store closings estimate wrong. Those incensed by the term “retail apocalypse” are wrong, too. The point hinges on what we mean by retail? If we mean retail revenue, then retail is doing fine. If we mean retail brand names/companies, then retail is not doing fine. Bankruptcies are at high levels. Mall and store closings are at high levels. Retail real estate values are plummeting. Yes, there are a handful of very successful retailers, but these are overwhelmed by the underperforming supermajority — department stores, luxury and the massive apparel segment. Call it a paradigm shift or a Jurassic moment or whatever, but to not recognize it is denying what’s taking place.

Gene Detroyer
BrainTrust

Yes, it is a matter of definition. Retail is not stores. Retail is any sale of goods to the public for use rather than for resale. If online takes $1 away from stores, that is not a loss of retail dollars.

Jason Goldberg
BrainTrust
No definition of retail apocalypse should be based on store counts. The U.S. has 24.5 square feet of retail space per capita compared with 16 in Canada and four in most of Europe. The U.S. could close 25 percent of all our retail space and STILL have more per person than anywhere else, and sales could go up. The number of stores does not directly correlate with retail sales much less retail health, unless you believe that 7-Eleven Inc. is twice as healthy as Walmart. Even so, Coresight has never been a reliable indicator of store closures. At best they publish a random list of chain closures with no particular criteria for inclusion. 25 percent of U.S. retailers are independent stores, which certainly aren’t covered in the Coresight numbers. In 2019 IHL published a more academically rigorous study of store closures that wildly disagreed with Coresight, but even IHL admitted an accurate count of store closures is near impossible. E-commerce is also not an indicator of a “retail apocalypse.” Is it an apocalypse if e-commerce… Read more »
Xavier Lederer
BrainTrust

Regardless of whether “apocalypse” is the appropriate word last year forced many retailers to make decisions that they were hoping to avoid and close down stores that they were hoping they could rescue. Last year was like a storm that knocks down weak trees: some of them may have collapsed without the storm.

Jeff Sward
BrainTrust

Evolution is all about slow, incremental change and it’s tough to extract headlines from that. The pandemic was indeed an apocalypse and it was pretty easy to transfer the emotion of that event to the impact it had on retail. Retailers and brands who had been managing their evolution in the years prior to the pandemic did just fine; Target and Lululemon and AEO. Retailers who had been neglectful of managing their own evolution got hammered; department stores. Every retailer is now officially on notice. Meteors do strike. Plan accordingly.

Shep Hyken
BrainTrust

Retail – especially in malls – was struggling before the pandemic. The move from brick-and-mortar to digital has been going on for years. All the pandemic did was accelerate the changes. Without the pandemic, we would have been where we are today in three to five years. All that said, some retailers have embraced the changes or weathered the storm (pandemic) better than others. The economy is coming back. In-store experiences will come back – at some level – when more consumers feel safer and comfortable. Will it resume at 2019 numbers? I doubt it. Consumers have seen the advantages of buying online in certain circumstances. Their habits have changed over the past few years – especially in the last year. This trend will continue.

Rich Kizer
BrainTrust

Sometimes I get frustrated. It is true that at the beginning of this horrible COVID-19 time, retailers got hit in the head by a huge rock, which they really never saw coming. Many weaker operators sadly did not have the finances to get aggressive to create a plan to survive. Many others had the ability to look at the landscape and make enormous decisions about strategies to implement during this time. They survived and, yes, not all thrived. But they really went to work.

Here is my frustration: not many of those retailers heard encouraging words, and some even believed what they heard. And that led to customers anticipating their probable demise. But during every slowdown, we see dark “for rent” windows and make gloomy predictions. Then eight months or a year later, we see new retailers lighting those windows. Let’s give all those hard working, inventive retailers support; they will show up. And so will jobs. And that will continue to generate customer enthusiasm.

Ananda Chakravarty
BrainTrust

There should be a name change from retail apocalypse to retail apocalypse haunting. Media and other sources have been pushing this term for so long with the idea that digital will run roughshod over the retail market. VCs love this push as it enhances the value of their new startups that are all digital. Consumers who enjoy Amazon or Walmart delivery conveniences are excited to hear their way of shopping is #1 and may lead to lower delivery costs. But the fact isn even with covid-19 ramp-up it will take 50+ years (actual timing varies, but it’s probably more than my lifetime) before online grows to even half the size of the physical retail market.

My favorite is when we were asking if the apocalypse actually ended — over a decade ago!

James Tenser
BrainTrust

To borrow a concept from cosmologists: “the retail universe is lumpy.” That is, it’s uneven; it’s not smooth; it’s not uniform. What we observe depends on what rock we are standing upon.

We are witnessing a true and tragic apocalypse for the independent restaurant trade, concurrent with a massive giddy sales increase for grocery, home center and mass retailers.

Like the man said while standing with one bare foot on dry ice and another in the campfire, “But on the average, I’m comfortable.”

To gain true insight into retail’s natural selection, we really need to examine the present state of each “species” of store.

This has been my patented screed against summary statistics. They are great for making headlines but terrible for making diagnoses that reflect nuanced understanding. Please pardon the clashing metaphors!

Craig Sundstrom
Guest

From overreaction to under-reaction? Here are some other stats: GDP numbers that will be “(only) back to pre-Pandemic levels” by 2022 … or 2023 … or 2025; the largest increase in homicides in U.S. history; a hundred thousand people (or more) still to die … to add to the 400K who already have. When I can actually find an open bar to buy George a drink, we can discuss the final impact. Until then, as they say, “too soon.”

Yogesh Kulkarni
BrainTrust
Yogesh Kulkarni
Chief Operating Officer, Antuit.ai
1 year 3 months ago

Retail went through several bankruptcies in 2020 and continues to do so in early 2021. While Coresight’s research might have estimated all the closures to happen in 2020, they might get spread out over 2021 too. A lot of retailers are following through the strategy of decreasing their store fleet and are not done yet. In addition, some of the very aggressive acquisition activity from mall owners like Simon and Brookfield has stemmed the closures temporarily. But ecommerce is here to grow and grow rapidly at the expense of stores for the near future. Anyone doubting that should look at Amazon’s staggering $120 billion+ revenue in the latest holiday quarter.

Trevor Sumner
BrainTrust

2021 will surprise Coresight again. $1.3 trillion more in savings in Americans pockets. 21 states upping their minimum wage this year. New stimulus coming. And pent up demand for the consumer to return to physical retailing, even as they more cautiously return to events and restaurants, so they get the best of continued retail spend shift and physical store shift. We predict 2021 will sizably beat current sales estimates.

Andrey Podgornov
Guest
1 year 3 months ago

I am sure that 2021 will be better than 2020. People are already used to the situation, vaccinations are being carried out, and life is returning to its former course. And this is a chance to redistribute the market because the habits of buyers are “lost” and you can intercept them. Whoever gives the best quality of service, that is, raises the level of internal standards, will win. And the main thing is that it is not so difficult to do this with the help of special IT services.

wpDiscuz
Braintrust
"As the saying goes: you can’t stop the waves, but you can learn to surf them. And that’s exactly what strong retailers will be doing in 2021."
"No definition of retail apocalypse should be based on store counts...The U.S. could close 25 percent of all our retail space and STILL have more per person than anywhere else."
"Call it a paradigm shift or a Jurassic moment or whatever, but to not recognize it is denying what’s taking place."

Take Our Instant Poll

How apprehensive does news about projected store closures make shoppers?

View Results

Loading ... Loading ...