Pandemic accelerates shift to online retail – will it become permanent in 2021 and beyond?

Since the coronavirus pandemic hit in mid-March, the front doors of homes have become less of an entry/exit point and more of a destination for delivered goods as more and more consumers opt to browse websites and snag packages from their welcome mat instead of leaving the house to browse brick-and-mortar aisles.

Case in point: In the third quarter of 2020, retail e-commerce sales in the U.S. totaled $199.4 billion, a 37% increase from the third quarter of 2019, according to the U.S. Census Bureau — and e-commerce sales in Q3 of 2020 accounted for more than 14% of total sales, roughly a 3% uptick from 2019.

The pandemic’s disruptions have transformed how American consumers behave by accelerating their embrace of digital commerce, and some of those changes are likely to prove permanent across the country and here in Nevada, says Bryan Wachter, senior vice president of the Retail Association of Nevada (RAN).

“Folks have changed their consumer behavior and changed their patterns,” Wachter said. “Things that maybe they didn't even know they could access before from their home, and suddenly it's kind of a whole new world that they can access. You have to think, why would someone go back to maybe something that was less efficient or not as convenient now that they have a new path forward?

"I think that's really going to drive a lot of that permanent change in consumer behavior.”

This was epitomized over the 2020 holiday season. In Nevada, an estimated 899,000 consumers did their Thanksgiving weekend shopping exclusively behind a computer or cellphone screen, an increase of more than 51%, according to RAN.

Nationwide, in-store shopping was down 55% on Thanksgiving Day and dropped 37% on Black Friday compared to 2019, according to the National Retailer Federation (NRF).

Bryan Wachter is head of the Retail Association of Nevada.

Throughout the pandemic, lockdowns, social distancing and other impacts of the crisis forced many consumers to try online shopping for everything from groceries to refrigerators to used cars and just about anything else in-between.

A summer 2020 survey by consulting firm McKinsey & Co. found that about three out of four people have tried a new shopping method due to COVID and that more than half of all consumers intend to continue using curbside pickup and grocery-delivery services after the pandemic is over. All told, nearly 70% of consumers surveyed intend to continue buying online for store pickup.


McKinsey & Co. concluded that the pandemic collapsed into just three months a process of adopting e-commerce that otherwise would have taken 10 years in the U.S. Put another way, the embrace of digital commerce is a whole decade ahead of schedule.

Locally, this spurred businesses to step up their digital services, said Alex Stettinski, executive director of the Downtown Reno Partnership, a business improvement district.

“Those business that were able to survive,” he said, “are the ones that were able to quickly switch gears, developed an online presence, a strong social media presence, offered curbside services, and were not hanging by the skin of their teeth financially before COVID.”

Stettinski simply feels the pandemic “accentuated hardships” that brick-and-mortar retailers in Reno and beyond were already experiencing before COVID.

“Retail has been in transition for long a while,” he said. “The consumer behavior has shifted — and this is all before COVID — more toward online offerings or experience-related stores that are more boutique, more unique.”

Alex Stettinski is executive director of the Downtown Reno Partnership.

The rapid shift fueled by COVID has positioned some businesses to thrive and grow, while others struggle or fail. Among the winners are those advancing the changes, including online retailers and service providers, technology firms and companies delivering the goods people are buying online.

“It’s an acceleration of a shift that started before COVID,” Stettinski said. “And those people that are strong and creative and innovative and have a relevant product will absolutely survive. And those that don’t may have to close their doors sooner than they would have had to without COVID.”

Wachter agreed.

“The firms that were already online and moving in that space or could adapt quickly to those platforms not only survived during the COVID recession, but maybe even thrived,” he said. “I think we would expect companies then to seriously begin taking a look at how they can make sure they’re capitalizing on that new consumer behavior.”

Faltering businesses, meanwhile, include those unable or unwilling to make the digital transition, or retailers that saw demand for their goods dampened by the pandemic. A prime example, Wachter said, are clothing stores that catered to work attire and business attire, which are now struggling due to the rise in companies doing business remotely.

“I think there’s a misconception that all retail is doing well during COVID,” he said. “I think it’s true if you were engaged in grocery or day-to-day necessary items. But, if you weren’t, 2020 was not a good year.”

Consequently, retailers across the U.S. were projected to close as many as 25,000 stores in 2020, according to a widely publicized summer report from market-research firm Coresight Research.

However, per an updated report published Jan. 10 from Coresight, those projections were well off — the firm tracked 8,721 U.S. store closures (gross) closing in 2020, compared to 9,832 gross in 2019.

Among other reasons, the firm attributed the updated figure to a combination of retailers implementing “radical solutions” — such as paying lower rents to landlords that had little choice to avoid fully losing a tenant — in addition to trends that show many consumers simply kept shopping due to spending less on other expenses amid lockdowns.


With that sort of optimism leading into 2021, some business leaders feel shopping in brick-and-mortar stores is poised for a comeback sooner rather than later, especially in Northern Nevada.

Ann Silver is CEO of the Reno+Sparks Chamber of Commerce.

Ann Silver, CEO of the Reno + Sparks Chamber of Commerce, said the chamber saw “very few closures” among its 2,000-plus members in 2020.

“I think retailers have demonstrated a great resiliency in the face of what I’ll call ever-changing and sometimes inconsistent directives,” Silver said, referring to the slew of business closure and capacity orders from Gov. Steve Sisolak throughout 2020, which linger into 2021. “And I think most of our community’s residents focused on supporting smaller businesses and retailers in order to ensure their sustainability.”

To that end, Silver feels, despite the surge in online shopping, there is a pent-up demand for consumers to shop in person in 2021 and beyond.

“I think it’s going to make a comeback,” Silver said. “I’m not one of those prognosticators who think we’ll all sit home on our computers and shop from now on.”

Meanwhile, some pandemic-driven changes on how people spend money may prove temporary, such as the shift away from activities requiring proximity to other people.

After all, many Americans have been bypassing air travel, and indoor dining, concert venues and amusement parks remain empty or close to it, leaving more money to spend on goods and services, as Coresight notes in its updated report.

But that trend could reverse as vaccinations increase and the virus subsides, which could lead to a big spike in consumer spending on vacations, entertainment and experiential retail.

The latter refers to a brick-and-mortar store that offers consumers a chance to buy an experience rather than just an object or service.

“We’re going to see consumers that spent a year inside are going to want to spend a year out doing things,” said Wachter, noting retailers have an opportunity to capitalize on the impending shift. “We’ve been moving toward an experience-driven retail to compete with online shopping. That experience-driven process is going to be a major leader as the world turns to being comfortable being out and about.”


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