COVID-19 LEAVES TRADITIONAL BRANDS BEHIND
By Zoë Ihaza
PRAD 396: Capstone
May 5, 2020
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The global pandemic has brought treacherous conditions -- e-commerce sales have skyrocketed, while traditional brands are in panic. Online purchases have become a long-term trend. Some brands such as Macy’s have closed its stores in response to the coronavirus.
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The novel coronavirus, which is known as COVID-19 has influenced consumer purchasing behavior by increasing the number of online purchases rather than in-person purchases. This is not surprising given the number of non-essential companies closing its stores. Consumers are depending on online shopping to satisfy their consumer needs such as the purchase of toilet paper. This novelty has generated a number of responses from brands and has sparked even more competition in the market. COVID-19 has both influenced consumer behavior and has had astronomical economic effects in the United States.
Consumers are leaving traditional brands in the dust
The global pandemic is amplifying gains for brands that use digital and social media. Moreover, digital brands are increasing their dominance in the market. According to Harriet Torry, “Many bricks-and-mortar retailers, which had seen falling foot traffic for years due to online competition, have now shuttered their stores while online merchants watch sales boom” (Torry, 2020). Products that are traditionally purchased in-person are now purchased digitally. These products include cosmetic products, food and more. For example, Amazon, which an e-commerce brand and Macy’s, a traditional, in-person brand has had varying share price performances. Amazon’s sales have risen immensely, while Macy’s performance has decreased immensely. In fact, Macy’s sales have decreased even more in January of 2020. This reflects how the pandemic became prevalent in 2020. As brands who are established online have attracted even more consumers, the pandemic has fueled a shift to e-commerce. Additionally, e-commerce sales have increased as a result of COVID-19. Torry reports that “As shoppers stayed away from stores, U.S. e-commerce sales rose 24% from March 1-17, compared to the same period a year ago. According to Rakuten Intelligence, which tracks electronic receipts” (Torry, 2020). Moreover, digital brands such as Amazon have seen increases in sales.
Social distancing is shifting the economy
Recently, the term, social distancing has been used to encourage individuals to distance themselves from others, so they can avoid acquiring COVID-19. The coronavirus has had economic effects in the United States. Over 3.28 million workers have applied for unemployment benefits. In fact, economists estimate that if it continues to increase, the U.S. economy will transform. As workers are applying for unemployment, nonessential businesses have closed their doors due to social distancing. Consequently, there has been a shutdown of malls, department stores and more. Some brands are furloughing thousands of employees. Macy’s and Gap had to furlough their employees due to their store closures.
Some traditional brands are in a tough situation
Some have predicted that consumers will continue to use digital platforms after the pandemic ends. According to Torry, “There’s a very, very short window of opportunity for lots of brands to up their game,’ said Malcolm Pinkerton, a retail expert at market-research firm Kantar, who expects many consumers to continue using digital platforms even after the coronavirus pandemic” (Torry, 2020). This means that traditional, in-store brands may experience some hardships as online shopping will no longer be a short-term option.
Some brands are still making their mark
counterargument
Recently, Amazon has been searching for employees as it relates to fulfilling delivery and online positions. Some in-store brands that are deemed to be essential have followed Amazon’s path. Some in-store brands have not closed its doors because of its vitalness for consumers. Walmart and CVS Health Corporation are actively seeking to hire over 500,000 employees. This high number is a response to some employees filing for unemployment. As discussed previously, many workers responded to the current pandemic by removing themselves from their job positions. Such traditional brands are in turmoil and are in need to hire a massive number of employees. This demonstrates that some traditional brands have a contrasting perspective on the status quo.
Conclusion
Although the coronavirus crisis has affected some in-person brands adversely, many e-commerce brands have experienced growth in their sales. In fact, the curator of EO products has seen an explosion in sales because of the coronavirus. The brand offers quality products such as hand sanitizer, which is even more essential during this harsh reality. While brands are affected differently, it is crucial to acknowledge the potential transformation that the market may experience. While many are jobless, others are using the difficult time to explore other avenues such as fulfilling a delivery job position. Such positions are deemed as essential due to the emergence of the need for delivery as many traditional brands are closed. Overall, this is a challenging time for many brands and there are many unknown possibilities of how the pandemic will affect the market.