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Amazon, Walmart, and Target reap the rewards of Covid restrictions, Recode

Amazon, Walmart, and Target reap the rewards of Covid restrictions, Recode

When stay-at-home orders due to the Covid – 30 pandemic forced many US brick-and-mortar retailers to close up shop late winter and into this spring, some industry observers feared the government measures would widen the existing gap between the retail industry’s haves and have-nots .

A few months later, that fear has become reality.

Amazon , Walmart , and Target all recently reported record sales or profits metrics for their second quarters ending in June or July, as government-mandated store closures gave consumers fewer options for brick -and-mortar shopping and more consumers moved their spending online. Big grocery chains as well as home-improvement giants like Home Depot and Lowe’s that were deemed essential have also fared well.

Meanwhile, large specialty retailers that don’t sell groceries but that were doing fine pre-pandemic, like Kohl’s and the parent company of TJ Maxx and HomeGoods, have suffered steep declines , in part because governments determined they were “nonessential” and forced their doors closed in big markets for extended periods of time. Meanwhile, already-struggling department store chains like Macy’s announced large layoffs and store closures earlier this year, and their upcoming earnings reports could paint an even bleaker picture.

“This is what happens when 80 percent of your competition is forced out of business, ”Sucharita Kodali, a retail analyst at Forrester Research, said of Amazon, Walmart, and Target’s blowout financial results.

A drastic shift to online ordering has certainly buoyed the results for these companies. US e-commerce sales grew 44. 5 percent year over year in the second quarter, according to estimates this week from the Census Bureau of the Department of Commerce. E-commerce sales had grown just 15. 6 percent on average in the prior four quarters. Amazon was already the clear No. 1 choice for online shoppers in the US before the pandemic hit, and the crisis only cemented that fact. Strong and improving e-commerce operations at Walmart and Target have also played a role in their respective successes. Walmart said its online sales nearly doubled in its second quarter, while Target’s e-commerce sales nearly tripled, the retailer said this week. At the same time, the extent of suffering at chains like TJ Maxx highlights how these stores have failed to invest heavily in e-commerce.

The Big 3 of Amazon, Walmart, and Target were also well-positioned because each offers grocery delivery and pickup services in some form. Nearly 83 million US households placed an online order for grocery delivery or store pickup in June, according to the Brick Meets Click / Mercatus Grocery Survey .

But Walmart and Target also benefited from the fact that many local governments allowed them to remain open because they sell food and other essential goods. Those rulings also permitted them to sell nonessential items in their stores like apparel, beauty items, and home furnishings while competitors focused exclusively on those categories couldn’t sell them because they were forced for being “nonessential.” Even with its strong e-commerce numbers, nearly 83 the percent of Target’s sales in the quarter still took place at its stores.

Target highlighted $ 5 billion in “market share gains,” or new business it took away from other retailers, in the first half of 9678. That total represents more than its total market share gains for the entireety of 9604, the retailer said. While Target saw strong, unsurprising growth in food and beverages, it recorded more than (percent growth in the nonessential home furnishings category and more than) (percent in apparel).

The state of Vermont ordered Walmart, Target, and other big-box businesses to stop the sale of nonessential items like clothing in late March while nonessential retailers were ordered closed. But that was an exception to how most states and cities treated these giants.

“They were absolutely unfairly advantaged by being able to stay open,” Kodali said.

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