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Is online retail profiting from store closures?

Who benefits from these extensive store closures in Europe? Some experts see online retail as the big winner. But this is not necessarily the case.

Europe’s shopping streets are currently deserted. Besides Italy, France, Austria, and some other countries, even Germany has now decreed extensive store closures. This measure is supposed to help contain the coronavirus. Supermarkets, beverage shops, pharmacies, health care supply stores, drug stores, gas stations, banks, pet supply stores, and wholesale markets are exempt from theses closures in most countries. 

But how do these store closures affect the retail sector? Who could benefit from this? At a first glance, the answer seems clear: online retail. Big online retailers like Amazon, Otto, etc. keep their virtual doors open for business. According to retail experts, the winners will mostly be online retailers who provide goods that are also available through stationary retail. Electronic goods, books, and household appliances are in demand. However, the Institute for International Retail and Distribution Management in Cologne does not expect any substantial leaps in growth for online retail.

Declining demand in Germany

Germany’s Federal Association for E-Commerce and Mail Order Business believes the current situation to be less promising. A survey of 135 online retailers showed that 41 percent already experience a decline in demand. More than 60 percent of all online retailers expect this declining demand to increase in the course of the year.

Amazon seems to have a different take on this situation. The online retailer can easily absorb the intermediate demand with partially automated logistics centers but they are desperately looking for additional staff. Amazon is supposed to hire 100,000 new employees in the US alone.

Online food retailers may also see a slight increase. However, this segment is and will remain a niche market for the time being. On the other hand, the situation’s impact on the consumers’ long-term behavior could be much more severe. Especially when customers acquire a liking for online retail.

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