Coronavirus Takes Heavy Toll on Retail Industry
For several weeks now, the coronavirus has kept people at home, socially distanced and away from work. Among the other disorienting effects, it also has brought to a halt the busy hum of commerce at many businesses in South Carolina and across the nation.
Though it is temporary - but of unknown duration - the national shutdown has had a predictably devastating effect on many facets of the economy. One of the hardest hit sectors has been the retail industry. In South Carolina, retail contributes a whopping $31 billion to the state's economy.
University of South Carolina Professor of Retailing Dr. Deborah Brosdahl tells us that there are more than 56,000 retail businesses in the Palmetto State, employing 450,000 people. "And that's not counting indirect employment, things produced in South Carolina that are then sold...we have another 628,000 people that indirectly are supported by retail."
There have been winners and losers in this health crisis, and Brosdahl said the biggest losers have been small businesses and dealers in non-essential items. "Small businesses have seen their incomes go down anywhere from 90 to 95 percent off from what they had been doing."
Dr. Rosalind Paige, associate professor of marketing at USC-Upstate, listed some of the winners which, naturally, sell items considered as essential:
"The larger stores, especially the food chains and even some of the home improvement chains, and pharmacies are doing well. Any kind of business that is carrying your essentials. Amazon, for example, online companies that offer these essential products. They can't even keep up."
The appeal, of course, is that buyers can shop from home and their goods are delivered to their doorsteps with no social interaction. "In fact," Paige added, "Amazon Prime shut down its grocery shipping...because they couldn't keep up. And they're also hiring more people to keep up with the demand."
The benefits spread beyond the actual goods being sold online. "Think about it," said Paige. "Everything that is shipped is shipped in a corrugated box. So packaging is doing really well."
On the whole, however, the virus has been enormously costly for retailers, even ruinous. Brosdahl estimated that some businesses may never reopen. "I would say five to ten percent of our businesses. If we have 56,000-plus retail establishments, that could mean 5600 stores and restaurants may not be able to make it. That's across the state, but still, that's a huge number."
Brosdahl predicted that online sales boosted by people staying home would continue into the post-virus recovery.
But that recovery could be slow, certainly slower than the economy's falloff. Paige said a factor that could slow any comeback is consumer confidence. "People are not going to be that confident to go out and be close to people. I think you're going to see retail shopping remain online, simply because of that social distancing. You're going to see night clubs and bars where people congregate and get close to each other and dance and mingle, those are going to be impacted. I'm a realist, and I happen to believe that this is going to last another year."
Paige said retailers should take valuable lessons from the pandemic. "People are going to start having a stronger plan for future disasters, whereas currently and previously, this type of thing was never considered. It just wasn't something that was put into a strategic plan. But I think everybody is now going to have some kind of a contingency plan for the event that this happens again, which is sadly what the scientists are predicting. So there's going to be a lot of changes in strategic planning, for certain."
Another lesson that should be added to retailers' plans for future product sourcing was added by Brosdahl: buy local when possible, support local small businesses and rely less on China for their products.