Where Are Our Businesses Going?
By: Chris Holman
Tags: Entrepreneurship, Covid-19, Business, Economics, Startup

Where Are Our Businesses Going?

American businesses are transitioning from storefronts to door fronts.

Photo by Curology on Unsplash

The pandemic has impacted businesses all across the globe. They are feeling the pinch from being closed, customers who are afraid of catching Coronavirus, and shrinking consumer spending.

Businesses are disappearing from our street corners and our shopping malls are being torn down faster than they are built. Many of these businesses have been family-owned restaurants and businesses that require personal contact. The only way to survive is to minimize personal contact and for many businesses that solution is home delivery.

Americans are being told to remain home and work from home whenever possible. Businesses have been told to remain closed if they are non-essential. Just this past week businesses in Michigan have closed down to conform to new restrictions put in place by the state. This is a problem because businesses rely on cash coming in to pay for inventories, office space, and supplies.

Businesses will be forced to adapt to changing demands and come up with unique solutions to remain afloat during the uncertainty. This can be a shift in manufacturing to support the effort against the pandemic, a shift in pricing strategies, or change how they interact with their customers. One example is shipping products directly to customers.

Walmart has renewed its push toward its delivery service, a feature Amazon has had almost since its inception. According to the Wall Street Journal Peloton (PTON) has increased its share price 306% since March 1st, from $27.92 to $113.44 a share. Home delivery is not just relevant to merchandise but also entertainment and physical fitness. This is the future of business.

Pizza and Chinese have always been delivered. Services like Uber Eats and Grub Hub are helping fast food places and restaurants enter the home delivery market as well. These services have served to become essential in the Coronavirus era.

The success of Netflix proves that instead of paying 19.99 for a movie, Americans would rather pay 9.99 in perpetuity for access to unlimited content, whether they use it or not. This has lead to the rise of subscription services. At home streaming content as a form of entertainment has expanded to Disney, Apple, Hulu, and more.

Businesses are struggling to catch up. America has been transitioning to a services industry for quite a while. Consumers expect that when buying a good or service they will be treated with top-notch customer service. Amazon has conditioned consumers that they should not have to pay for shipping and that they should receive their products within two days.

As businesses continue to evolve we will see a shift in the way business is conducted. People staying home will lead to the destruction of shopping centers. Across the country, malls are becoming a thing of the past. Shoppers were transitioning from in-person to internet shopping before the global pandemic which has facilitated a faster change. Home delivery of fitness, entertainment, and merchandise is here to stay.

There are a few retailers that will fare well in this transition. Some of these are already evident. Amazon already has a vast network of warehouses and a friendly online customer interface system. As mentioned before Walmart will continue to evolve and move its stores from department stores to warehouses, where shelf stockers and associates are transitioned to delivery personnel.

An unlikely competitor will emerge from Costco. The bulk warehouse has an expansive network of warehouses that can transition to delivery easier than Walmart. Set up more like a department store, Walmart will need to transition to more of a warehouse layout. Once Costco improves its web page layout, they already have a subscription base similar to Amazon Prime and will be better able to directly compete.

For decades the United States has been transitioning from a manufacturing to a services industry. With the current advances in technology, we have been able to continue to progress towards delivery as a service. Continued automation in the manufacturing industry will lead services industries to become remote and increasingly dependent upon home delivery. Failure to adopt some form of home delivery is planning on business failure.