December 30, 2020 | Last Updated on: June 30, 2023
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The COVID-19 pandemic has completely changed the way we live, work, and shop in the United States—and that includes retail. Lockdowns in the first half of the year and the continued challenges in controlling the pandemic have completely shifted consumer demand, consumer spending, and shopping behaviors in the US—and, as a result, the retail landscape is a completely different space from this time last year.
But as we head into the new year, the question is—how, exactly, did the COVID-19 pandemic changed retail in the US? What were the biggest retail trends that emerged in 2020? And how are those trends going to impact the retail landscape in 2021 (and beyond)?
Online shopping has been steadily gaining popularity for years. But the coronavirus outbreak—and the corresponding stay-at-home orders and shut down of non-essential businesses—hastened the shift to ecommerce sales. According to data from eMarketer, in 2020, ecommerce sales in the US are projected to grow 32.4 percent year-over-year, while brick and mortar sales are projected to fall 3.2 percent—and according to the U.S. Census Bureau, retail e-commerce sales hit $209.5 billion in Q3 2020, making up 14.3 percent of total retail sales in the United States.
While there is plenty of evidence to support the shift towards ecommerce throughout 2020 (for example, according to data from Deloitte, by mid-April, online orders in the United States had jumped by a whopping 130 percent, including in areas that had previously struggled in the ecommerizce space, like grocery), nowhere was this shift more evident than over the holiday season.
Black Friday is traditionally the year’s biggest shopping day, with shoppers hitting Walmart, Target, and other brick and mortar stores for deals on everything from electronics to apparel. But this year, anticipating shoppers would feel less comfortable shopping in person (and dealing with Black Friday crowds), many retailers shifted their focus to Cyber Monday ecommerce sales—a shift that paid off in a big way. While Black Friday foot traffic declined 52 percent year-over-year, Cyber Monday spending increased 15.1 percent year-over-year in 2020, hitting $10.8 billion in 2020—the largest U.S. online shopping day in history.
What this trend means for the future of retail: COVID-19 has forced retailers to shift their focus to ecommerce in the short term. But as U.S. consumers have grown more accustomed to online shopping, retailers will need to embrace a longer-term ecommerce strategy, offering easy, convenient, and quick digital shopping options for their customers—even as the pandemic (hopefully) subsides and customers are able to return to brick and mortar shopping in 2021.
While many brick and mortar retailers were forced to close their doors for at least some portion of 2020, many were allowed to reopen (or, if they were deemed essential, stay open)—albeit with some serious changes to how they were able to serve their customers.
In order to continue doing business in 2020—both in person and online—retailers had to adjust their strategies to offer their customers higher levels of safety and convenience. For brick and mortar retailers, that meant:
What this trend means for the future of retail: With vaccine distribution currently underway in the United States, the hope is that 2021 will see a return to a more “normal” in-person shopping experience—including increasing customer capacity in-store and loosening some of the COVID-related safety precautions that were a must in 2020. But there’s no way of saying with certainty when it will be safe to do that—so expect those safety protocols to stay in place in retail locations well into 2021. And even though the changes to operations for many retailers (like offering online ordering, curbside pickup, and shifting the focus from brick and mortar to ecommerce) may have been inspired by COVID, those trends aren’t going anywhere—and will become mainstays for retailers in 2021 and beyond.
As mentioned, the COVID-19 pandemic completely changed the way people live and function in the United States—and retailers that were able to capitalize on those changes emerged as the retail powerhouses of 2020.
For example, stay-at-home orders drove consumer demand in the at-home fitness space—and retailers like Peloton, which sells high-end at-home fitness equipment and on-demand classes—saw their revenue, profitability, and sales growth skyrocket. In fiscal Q4 2020, Peloton’s sales hit $607.1 million, up from $223.2 million in 2019—an incredible 172 percent year-over-year growth.
COVID restrictions also prevented people from dining out at restaurants. This drove an increased interest in cooking at home—which created a serious opportunity for subscription meal kit delivery companies, like HelloFresh—whose revenue is projected to nearly double for calendar year 2020.
And while stay-at-home orders caused serious revenue declines for apparel retailers (when people have nowhere to go, they’re far less likely to buy new clothing), retailers that specialize in “athleisure” wear like sweatshirts, sweatpants, and other comfort pieces saw sales surge—with total sales projected to hit $105.1 billion in 2021.
The point is, COVID made 2020 a year like no other—and retail companies that spoke to those changes ultimately proved to be the most successful in 2020.
What this trend means for the future of retail: There’s no denying that certain retailers and retail brands were uniquely positioned to succeed in 2020—but whether those trends continue past the pandemic remains to be seen. When people feel safe to go back to gyms, will at-home fitness equipment be in such high demand? When restaurants are thriving again, will consumers be as interested in delivery meal kits? When people head back to the office, will athleisure lose its comfy appeal? Only time will tell.
