Traditional US retailers that can adapt will flourish

Significance

Walmart had also joined Microsoft to bid for TikTok’s US assets, seeing the video-sharing app boosting its digital media business. The legacy retailer’s transformation provides a counter-narrative to the ‘retail apocalypse’ story and underlines the Darwinian evolution of the sector that underpins the consumption-driven economy.

Impacts

• Retail demand will remain depressed until employment returns to pre-recession levels, which may not be until well into 2021.
• The pandemic will amplify the weaknesses of retailers that were struggling before COVID-19.
• Chapter 11 bankruptcies will rise among indebted discretionary retailers such as apparel stores, especially in the mid-priced bracket.
• Real wages will remain subdued and income inequality is likely to rise; this will sustain discount retailers and own-label brands.