The pandemic accelerated the ongoing shift from consumer buying in brick-and-mortar stores to online shopping. In 2000, online shopping accounted for 5.2% of retail sales and department stores, 7.2%. In January 2020, right before the pandemic, those numbers were 12.4% for online and 2.1% in stores. Then non-store sales jumped to 14.3% of the total in September while department stores dropped to 2.0%. These trends will probably persist since consumers have tasted the convenience of ordering online for next-day delivery of everything from precooked meals to computers. These trends continue to favor Amazon and similar services at the expense of department stores.
Now, even cars can be sold online. Ford Motor Co. introduced a program to facilitate online purchases of new cars with customized options that are then picked up at dealer locations. This will allow Ford to operate with a 50-to-60-day supply of vehicles on dealers’ lots compared with 75 days historically.
My next column will discuss the four remaining lasting effects of the pandemic: more consumer caution and higher saving rates, slower global economic growth with low inflation and interest rates, commodity prices weakness and subdued equity prices.
Gary Shilling is president of A. Gary Shilling & Co., a New Jersey consultancy, a Registered Investment Advisor and author of The Age of Deleveraging: Investment Strategies for a Decade of Slow Growth and Deflation. Some portfolios he manages invest in currencies and commodities.