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The COVID-19 pandemic has already had a major impact on the way in which we shop, engage in fitness and entertainment, and other activities, and some of them are likely to become permanent, a new analysis says.
“The coronavirus pandemic has transformed the way Americans eat, shop and entertain themselves. In one manner or another, most of these consumer activities have moved into the home and online,” The Wall Street Journal reported in the third of a five-part series examining how the U.S. economy will look once the pandemic is over.
“Now, with effective vaccines on the horizon, the most important question for investors is how much never goes back to the way it used to be. The answers will have major implications for swaths of the economy, but they aren’t likely to be straightforward. Each affected industry has its own nuances to consider,” the WSJ analysis continued.
When workarounds that consumers have had to adopt in order to cope with restrictions and other virus-related inconveniences are not better than how we used to do things before pandemics, then those activities ought to resume very fast.
But in cases where the workaround is superior, such as ordering groceries online and having them delivered rather than going to supermarkets to shop, then those activities are liable to remain in wide use.
And some activities, like engaging in fitness and watching movies, have been in competition already for a number of years. Workout videos, for instance, make exercise at home both possible and convenient, while streaming movies via the Internet has long been preferable to millions of Americans.
Still, as the WSJ notes, some 1.2 billion movie tickets were sold in the U.S. last year, or roughly the same as five years ago, though several new streaming services have been launched and though ticket prices rose by about 12 percent.
For these sectors, the bigger question might be who survives to meet that demand when it eventually comes back,” the analysis notes. “Several gym chains such as 24-Hour Fitness and Gold’s Gym have filed for bankruptcy protection, as have more specialized offerings such as Cyc Fitness, Flywheel Sports and YogaWorks.
“Among theater chains, AMC Entertainment says it will need to raise additional capital to ensure it can survive until the summer of 2021, which is when Hollywood intends to get many of its delayed blockbusters back into theaters,” the analysis further notes.
Other behaviors are likely to remain in wide use. For example, scores of Americans had to learn how to cook during the pandemic as restaurants were shuttered as non-essential — though many of them adopted curbside pickup and delivery services.
“This has been a boon for food companies like General Mills, Campbell Soup and McCormick,” the analysis said.
Big box retailers have also seen a dramatic increase in revenue, as they were among the businesses that governors and mayors allowed to remain open.
“Among retailers, big-box players Walmart, Target and Costco have been among the biggest winners from the pandemic. That is both because they have the scale to invest in e-commerce and because shoppers have preferred to visit as few places as possible to pick up their essentials,” the analysis noted further, adding that Walmart sales grew 10 percent this year through July 31.
Department stores, however, did not fare as well. Sales for those retailers, including Macy’s and Kohl’s and others, have dropped off dramatically as Americans instead turned to online retailers like Amazon to get their merchandise delivered.
“Finally, some categories of bricks-and-mortar retail now face serious online competition for the first time. Furniture, for example, used to be a category that consumers overwhelmingly preferred to see in person,” says the analysis.
“With any luck, Americans by next summer will be crowding bars and movie theaters once again. But for many merchants, there will be no way to put the pandemic genie back in the bottle. Things will never be quite the same again.”