Contrary to rumors, physical stores have not yet returned

If you follow the news, you’ve probably noticed a ton of headlines proclaiming the return of brick-and-mortar retail. Earlier this week, The New York Times even hailed the return of shopping malls.

There’s just one problem: If you think brick-and-mortar stores are suddenly making a comeback, you’re ignoring something that’s been true for nearly three years.

As many of you remember well, the severity of the COVID crisis led to widespread store closures over many weeks. Even after most stores reopened, consumers were initially slow to return to their previous shopping patterns. But the facts are stubborn, and the data shows that even if brick-and-mortar stores went away, for the most part they came back fairly quickly, and in many cases with a vengeance.

As EMarketer data shows, brick-and-mortar sales overall fell slightly in 2020. But sales rebounded strongly in 2021, well above 2019 levels. Overall brick-and-mortar sales will continue to grow in 2022, exceeding 2020 levels by more than 15%.

From a different perspective, many metrics of store traffic recovered to pre-pandemic levels by the end of 2021. Additionally, store openings for many retailers have remained strong throughout the post-pandemic period, with overall openings outnumbering closures in both 2022 and 2023.

To be clear, as with many aspects of retail, we continue to see a pattern of bifurcation. So-called “A” malls are performing well, while many lower-end centers continue to struggle for the long term. Suburban stores for most brands have typically outperformed their urban peers by a large margin. In a pattern that emerged pre-COVID-19, store closures and bankruptcies have been concentrated among retailers trapped in the lower-profile middle tier. Meanwhile, retailers with value propositions that are unique and highly relevant to customers continue to keep stores open and drive strong sales growth.

This phenomenon is nothing new; it’s easy to see if you look for it while ignoring unreliable narrators: Ask any prominent retailer if their brick-and-mortar stores are back, and most will tell you they’re only on a short hiatus.

It’s also important to note that physical locations frequently play a significant and growing role in driving the growth of online commerce. Physical locations have (and will continue to) significantly outpace store growth rates. Brick-and-mortar stores help drive e-commerce demand and are often essential for fulfilling orders by customers who choose direct from-store shipping, local delivery, or “click and collect.”

Before the pandemic, retailers like Walmart, Target, and Best Buy were already increasing their investments in brick-and-mortar stores, seeing stores as an asset they could leverage to deliver a hybrid, harmonious shopping experience across channels, while too many of their competitors fell prey to the retail apocalypse nonsense and scaled back similar efforts.

The lesson here is that, as I wrote in my first book, and as I’ve been saying for almost a decade, the demise of the physical store is still greatly exaggerated. Physical stores are clearly different, and they will continue to cede market share to e-commerce, but they are far from over. Ignore this at your peril.