One of the strongest features of our economy is the retail industry. However, in a year wrought with health and economic crises, retail companies large and small struggled to redirect their sales models and stay afloat.
Today, we’re taking a look at the different sectors of the retail industry and which retail companies were the most successful in 2020.
What are the Different Sectors of the Retail Industry?
In life, there are essential purchases, and then there are the things you want to have. Companies that sell non-essential items (and the distributors that supply them) fall under the broad “retail” umbrella. The retail industry can be broken into the following sectors:
- Clothing stores
- Department stores
- Computers and electronics stores
- Home improvement stores
- Auto parts stores
- Home furnishing stores
- Internet-based companies that sell products to people through computers or mobile devices
What were the Most Successful Retail Companies in 2020?
At the beginning of the year, the risk and financial advisory firm Deloitte predicted that convenience would play a larger role in consumers’ choices in 2020. And they claimed forward-thinking retailers who were well-positioned to supply that measure of convenience would set the tone for the industry.
While Deloitte could not have predicted the COVID-19 global pandemic, their industry predictions were spot on. As the Motley Fool wrote, “Many retail stores were forced to close or alter operations while stay-at-home orders were in place [this spring]. E-commerce, unsurprisingly, boomed as customers avoided stores, and demand for some products plunged.” The top retail stocks of the year belonged to companies whose business model already prioritized the convenience of e-commerce, as well as a few (namely, Home Depot) whose products were even more in-demand while the public was quarantined at home and in need of projects to keep busy.
No surprise: Amazon was the year’s biggest winner. Like other retailers, the company had to absorb additional costs related to the pandemic—in their case, billions of dollars. But as the nation’s preeminent e-commerce retailer, consumers leaned heavily on their delivery services throughout the year. And that paid off.
In other sectors, lululemon athletica benefitted as consumers began working from home and craved comfier clothes. Ulta Beauty’s products have replaced the spa experience, and offer consumers a way to manage stress through self care. And Walmart’s sales have soared during the pandemic because its online grocery pick-up and delivery services proved to be tailor-made for the current shopping environment.
Additional brands that are poised for success through the holidays and into 2021 include Best Buy, Dollar Tree, L Brands (Victoria’s Secret, Bath & Body Works), Target, and Williams-Sonoma. As you can see, the most successful brands of 2020 cover nearly all the retail sectors mentioned above.
So, Which Retail Sectors were the Most Successful in 2020?
Ultimately, there were many winners and losers for each retail sector. For every successful lululemon, there was a Neiman Marcus that declared bankruptcy. The key to surviving 2020 seemed to be the ability to pivot your sales and distribution model, meet customers where they are (in this case, at home online and at the curbside), and maintain a healthy balance sheet. The companies that had all these measures in place before the pandemic proved resilient throughout the year. And while the companies we covered above are major national brands, the same principles held true for retailers at the local level, as well.
So, what challenges will the retail sectors see in 2021? If we’re learned anything from this year, it’s that there could be plenty of strong unknowns in the future. But strong brands with healthy bottom lines will continue to be successful. That is, as long as they remain in a position to quickly adapt to changing demand.
Do you have more questions about retail businesses and commercial real estate? Reach out to our commercial real estate experts at NAI Beverly-Hanks today!