Thursday, August 6th, 2020
The coronavirus disease has resulted in many changes to our normal way of life. People have to wear masks, sanitize regularly, observe distancing, and remain at home to avoid contracting the deadly viral infection.
Businesses, especially physical shops, were adversely affected when the pandemic began to ravage the US early this year. A majority of consumers decided to stock their homes with supplies, while others shifted to ecommerce firms.
As a result, physical shops have experienced a sharp drop in sales leading to losses and, in the worst cases, store closures. Although the federal government is easing restrictions in a bid to revive economic activities, some experts predict a rise in failed stores and shops.
Coresight Research, an American firm, predicts that close to 24000 stores will close down indefinitely due to the ongoing coronavirus pandemic. According to the firm, this figure includes new closures and permanent closure of firms that have closed up temporarily but is not inclusive of freshly opened stores.
In 2019, the forecasting firm predicted that roughly 9,820 shops would close down, and this new figure is more than double the previous prediction. In March, the New York-based company anticipated that approximately 15000 stores would close by the end of 2020, but this latest analysis pushes that figure higher.
Coresight Research says that shopping center retailers are at a high risk of closure. With people avoiding public places such as malls, such shops are at a 50- 60 % risk of closure. A lack of customers and high rent charges only increase the risk of closure.
This foreboding forecast goes public when the nation is easing its restrictions and allowing many shops to open up again. In early June, major supply chain stores started to regain their normal transaction volume, as seen in previous years.
Payment Companies Spot a recovery in Consumer Spending Trends
Companies that handle the processing of payments are witnessing an upward trend in consumer spending that had dropped at the beginning of the pandemic.
For instance, Mastercard noted that its switch volume was 8% lower in the last week of March, leveled weeks later, and went up 23% in April.
The firm stated that this decrease in switched volume deficit indicates a normalization curve where consumer spending habits are returning to normal.
With the easing of restrictions, consumers are freer to purchase goods and services. This curve is also attributed to ecommerce and ensured the continuity of business during the ongoing pandemic.
Some experts fear many small scale firms may close up permanently shop as a result of the adverse commercial effects of COVID-19. However, as the government eases the coronavirus restrictions, business activities will likely normalize in the future.