newswire: 8/26/2020
- Target just reported its biggest quarterly sales gain ever (24%), sending the company's profit soaring. The retailer's surging sales during the pandemic illustrate the widening gap between big and small retailers; as struggling competitors have closed their doors, big-box chains with "essential" products and far more resources have thrived. (Financial Times)
- NH: While many businesses have struggled to stay afloat during the pandemic, others have thrived. Target had its biggest quarterly sales gain since its founding in 1962. Walmart’s second quarter sales increased by 9.2%. Home Depot's sales rose 6.4% in their quarter ending in May. And Lowes had an 11.2% sales increase this spring.
- What do these stores have in common? They are big-box retailers. This gives them an advantage on many fronts. Because they carry numerous products, they were labeled "essential business" and were thus allowed to stay open during lockdowns. Since consumers can satisfy all their shopping needs in one place, big-box stores enable people to minimize their exposure to others. These stores all have an already-established online infrastructure to support e-commerce. And with ample access to Fed-supported banks and capital markets, they had no problem getting hold of cash when the shutdown was tightest.
- That's not all. Big-box retailers also promise standardized safety protocols. You know that every Target across the country is following the same health guidelines. That can't be said about the mom and pop grocery store, where it's a gamble if social distancing is taken seriously. (See "Goodbye to the Sharing Economy?")
- The result? Americans in need of toilet paper, cleaning supplies, and groceries are rushing to Walmart or Target. Meanwhile, the Boomers and Xers who now find themselves with plenty of time to remodel their bathrooms and tackle those long-overdue DIY projects are heading straight to Home Depot and Lowes. (See "Why Americans Are Spending More On Home Improvement.") While smaller and more specialized retailers are shrinking or going out of business, the old adage remains true: The big are getting bigger.
