No longer buoyed by in-store sales, retailers are paying the price for the high costs associated with selling more online. Mass store closings pushed consumers online to make their purchases, and now that the number of coronavirus cases is spiking, customers are showing reluctance to come into the newly reopened stores. With shopping dollars moving increasingly online, retailers are facing the consequences of a trade-off they made long ago: using in-store sales to help them cover the high costs of selling products online, which include fulfillment and shipping. With in-store sales falling, the retailers who depended on them are seeing losses mount.
When it comes to online sales, “retailers have always given away too much margin,” said Neil Saunders, managing director at GlobalData Retail. “Now that more stores are closed and online penetration is higher, losses have exploded.”