Is there a silver lining to the massive migration of consumers to big box online retailers in response to Covid-19? Yes, says Brand Federation managing partner, Matt Williams, in The New York Times. Williams provided insight to reporter Gillian Friedman for an article in The Times’ business section Wednesday, August 19, about the surprising surge in superstore sales in the quarter ending June 30.
It’s a good sign for the economy, Williams told The Times, “it means consumers are still spending, maybe not at the same volumes and on the same things as in the past, but they’re still spending. That’s encouraging." Williams hopes sales will keep supply chains strong, helping ensure job security for the millions of people the retailers employ.
The sales surge has been led by ecommerce. Stores that offer easy online ordering and curbside pickup are booming. Amazon isn’t the only retailer breaking sales records. Target, Walmart, Home Depot, Lowe’s -- even newcomer Wayfair -- all had record sales in the second quarter.
Stores whose brands and experiences have fallen behind have suffered substantial losses, resulting in bankruptcy filings for clothing retailers JCPenney, J. Crew and Men’s Wearhouse, among others. Not only has spending during the pandemic moved online, it has also shifted toward quarantine-friendly categories like home improvement and streaming media.
Retail sales have been helped by stimulus checks from the U.S. Treasury and enhanced unemployment benefits of $2,400/month — higher than the minimum wage and more than many people make working full time. Those enhanced benefits ended in July and negotiations for an extension and/or a second stimulus check have dragged on with no clear end in sight.
It is likely the retail boom will slow without stimulus checks, enhanced unemployment benefits, or some other federal government stimulus. However, the shift to online ordering from big box retailers will deepen as scientists work to develop an effective prevention or vaccine for COVID-19. Companies who invest in their online platform have a better chance of surviving the slowdown and a shorter time to recovery once lockdown restrictions end.
Williams credits the big box online retailers for taking the initiative to redesign their sales channels. Williams told The Times, “These brands have made huge investments in e-commerce and curbside pick-up and those investments are paying off big time as consumers struggle with the Coronavirus. It’s a lesson in the power of staying close to customers and meeting them where they are, especially as their worlds are changing so quickly.”
Matt Williams is chief growth officer and managing partner for Brand Federation. Prior to joining Brand Federation in 2019, Matt was CEO of The Martin Agency, one of the world’s most creatively recognized advertising agencies. Over his 26-year career at Martin, he helped the agency become the 25th-largest in the US and managed brand strategy development for world-class brands like GEICO, OREO, UPS, Discover Financial, Walmart, and Benjamin Moore. Matt also is a Clinical Professor in the marketing department at the Mason School of Business at William & Mary. He teaches in the MBA program and is the developer and Faculty Director of the school’s Online Masters in Marketing.
