Just Some Thoughts on Covid And The Future of Retail


Haven’t posted on here for a while but just wanted to post some observations on how Covid has affected retail in general and what it may portend for the future.

One of the effects has been the loss of employees both in retail stores and restaurants.  Many of them either left due to fears of contracting Covid or due to layoffs when their business slowed down or closed.  After being paid for not working (and in some cases making more than they were while they were working, that happened in my case) they are now content to stay home rather than return to a low-paying, stressful job.  If the government cuts off or reduces unemployment pay they may be forced to return to work, but they may have saved up some money and are going to take their time to find a better job.

This has made the retailers and restaurants short-handed and desperate for help.  You can’t go anywhere without seeing “Now Hiring!” signs in the window because stores are incredibly understaffed.   Restaurants are so short that it is impacting their service and some are reducing hours or just not able to serve enough customers.  So as a result, more and more restaurants will end up closing.  This will drive sales at the remaining restaurants, hopefully by then they will be able to hire some of the people who were laid off and we could end up with a lot of busy restaurants again.

However, if the employees are making more money (they have had to raise salaries to attract people to work there) the restaurant will have no choice but to raise food prices, and at some point many customers will decide to cook themselves instead of overpaying for a dine-in meal.  Due to the pandemic more and more people have started using food delivery services such as GrubHub and DoorDash or just grabbing take out, so there has been and will continue to be a shift towards people eating at home.

On the other hand, if more people are eating at home, the restaurants will need less servers, so maybe that will keep the food prices from going up.    More employees could be laid off and may end up working for a food delivery service, as those businesses have gotten busier.  People still need to eat!

Retail stores are following the same pattern.  Over the years they have been losing business to Amazon and the pandemic accelerated this trend as more people discovered how easy it is to have something delivered to them instead of making a trip to the store.  Sales drop=less employees needed, and the employees working there will be making more money.  (Where I work the entry level pay has gone from $8.50 to $16.00 over the last 2 years!) If retailers raise prices to offset the additional labor cost, they will drive even more customers to Amazon.  So much like the restaurant business, I foresee a lot of retailers closing locations to consolidate what sales are left into less buildings.   There are already a lot of empty buildings near me and in most cases the land is being converted into housing instead of retail.    Pharmacies like CVS and Walgreens may survive due to the increased profits they are making from Covid vaccines and tests so you will probably not see them closing any stores for a while.   Companies like Staples, Lowes, and grocery stores are definitely going to struggle going forward.

So while no one can predict how long the pandemic will go on and continue to impact our lives, it has already had some permanent effects on retail and restaurants and it will be interesting to see how the landscape changes over the next few years.   Your thoughts?