What:  The Economist draws some lessons from the current picture of the US Retail market

Why it is important:  Amazon did not kill the industry as announced, far from it.

Vaccines, stimulus cheques and optimism allowed American consumers to get back into shops (virtual and offline), even though August is slightly lower than July 21 due to fears related to the Delta Variant.

The Economist takes some distance to look at the bigger picture and the learnings so far:

• E-commerce significantly rose, as predicted: from 14% of total business in 2018 to 20%,
• However, Amazon did not annihilate the rest of US retailers as many prophets of doom announced during the height of the pandemic, often under the “retail apocalypse” reference.

Contrary to plainly taking hits, US retailers adapted to the new reality, helping them to collectively look in better shape (their total market value, excluding Amazon, exceeds by 88% the same 2018 number). This transformation took place alongside 3 axes:

• The biggest retailers embraced digital, such as Walmart which announced that e-commerce now represents in 2021 13% of its total sales (USD 75 bn),
• Some retailers also opted to collaborate with digital-only alternatives to Amazon, such as Shopify, Etsi or Instacart,
• Brands also decided to take back control of their distribution, according to the DTC model.

The Economist concludes that in order to face disruption, market players need to experiment and invest, citing the Walmart example which had many false starts and raised its capital spending by 40%.

How American retailers have adapted to the Amazon effect