Member Brief: The Great Equalizer


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Seated in terminal four at Los Angeles International Airport in early June 2020, it became clear. Retail has bifurcated, and the American consumer is polarizing with it.

The “new normal” isn’t the same for everyone. For the few, the new normal represents quality levels of access, comfort, and availability that the wealth class is accustomed to. For them, it’s as though little has changed. Rather than walking into stores, these customers have adapted to appointment-only retail, elevating the experience with methods that independent boutiques have used for decades. Five-star hotels employ skeleton crews to service the needs of wealthy residents with half of the intended staff. At airports, lines wade into 30-minute territory for a Starbucks coffee. Across the corridor, the AmEx Lounge provides refuge for those with unlimited credit, metal cards, and extraordinary credit scores.

For the middle-class masses, the new normal is a currency that is worth less than it was at the beginning of this year. The three- and four-star hotels that remain in operation are outfitted for essential travelers, medical workers, and the quarantined. In those hotels, there are five-day rotations for cleaning crews. Food, health, and fitness resources are rarely available. Customers who use these facilities are asked to lower their expectations.


At America’s best malls, a number of retailers have timidly reopened while many remain closed for business. As the first wave of COVID-19 ran its course, inventory, merchandising and social-distancing mandates left many stores with experiences that no longer support in-store economics. For department stores like Nordstrom and Macy’s, the effort may not be worth the reward. It will be difficult to maintain stores as profit centers.

Over a span of six weeks, I have traveled by plane to six regions: Atlanta, Charlotte, Dallas, Asheville, Minneapolis, and Los Angeles. I’ve taken survey of 81 stores in four of these locales. I’ve noted social distancing practices, foot traffic, and inventory. In this time, I’ve been a resident at seven hotels in three categories (three, four, and five stars). The notable divide may have lasting implications for retail, eCommerce, and adjacent industries.

Travel, retail, and lodging are designed to be tolerable at worst, enjoyable at least, and aspirational at best. COVID-19 and America’s continued social unrest are contributing to the bifurcation of the American consumer. In Gilded Age 2.0, 2PM explains:

There is a polarization of American wealth, and it’s progressing at a dizzying pace. Look no further than San Francisco, where the newly homeless camp against the walls of four and five-star hotels. The dichotomy is striking. Or consider New York City, where there may be slightly less of a wealth disparity (to the blind eye). Yet, the city’s private helicopter traffic is growing noisier while the subway system is failing many who are fighting to remain in the middle class. There are as many last mile workers on the streets of New York as there are pedestrians at times. [1]

With no end to government restrictions on travel, gatherings, and retail, it is eCommerce that has the potential to become the great equalizer. As more Americans venture out to test the waters with travel, lodging, and specialty retail, these experiences may be more of a deterrent than a welcomed tradition. Digital commerce was a niche channel for the tech-savvy and the upper-class; now, they will become refuges for the under-retailed.

The Great Equalizer

Online retail has long served along the fringes of American consumerism. With penetration improving from 11.9% to a number exceeding 20% in just four months, a contraction in eCommerce growth was expected as stores reopened and traditional consumer behaviors returned. One visit to these stores is a reminder of how fragile the entire retail and service industries were.

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10 years vs. 8 weeks

In J-Curves and Agglomeration, 2PM explains:

As local economies reopen, eCommerce penetration will fall as the aggregate retail economy begins to regain its footing. But unemployment figures won’t ever look like they did in January or February. In the next 24 months, employment is unlikely to return to the record low 3.5% that existed prior to the global pandemic. [2]

The American consumer is experiencing three simultaneous forces with no end in sight: a resurgent COVID-19 spread, social justice unrest, and an unemployment rate that continues to cripple the service and retail industries. In a recent interview, University of California-Irvine professor Eric Spanganberg stated:

Across the country, as states relax safety directives to varying degrees, some of the changes will be long-term. An enormous amount of shopping behavior had moved online over the last several years and has moved further online since the pandemic hit, and much of it will stay there. Stay-at-home orders have been in place long enough for people to develop new habits, and the reopening process has been gradual enough that the online shopping habits many people have acquired will become their default go-to routines for many things. [3]

The trip through six cities, 81 stores, and seven hotels provided clarity on the necessity of quality retail and product availability to the middle class. These consumer experiences have diminished in traditional retail and service. And as a result, the middle-class has been handcuffed by low inventory, long lines, poor service, and general unavailability. With the SARS epidemic of 2003, Alibaba CEO Jack Ma remedied similar inefficiencies by building peer-to-peer and business-to-business (B2B) marketplaces to facilitate trade through digital channels. In The Fourth Day of Quarantine, 2PM explores this resolution:

Ma used eCommerce as a hedge against catastrophe. Never again would a cancelled trade show or business conference impact Alibaba’s sales in the way that it had in 2003 and he was correct. In 2002, China’s penetration rate was one-fourth of the United States. Today, China is at 36.6% penetration while America lags behind at 11.2%. [4]

Today, Alibaba is employing this same strategy for the American retail market. The eCommerce retailer announced a new platform for B2B retailers, a real-time trade show platform for curated experiences. Alibaba has designed this to promote trade by facilitating enterprise and wholesale transactions. Ma’s decision to launch this new initiative is indicative of eCommerce’s emerging role in the United States, Alibaba’s top growth market.

If willing, there are millions of employed citizens who can afford to visit malls, take flights across country, and stay at well-appointed hotels. For premium and luxury consumers: welcoming environments, attentive personnel, and enjoyable experiences await. But for the rest, the physical retail and service industries are reflective of consumer bifurcation. When boundless restrictions, fear of physical endangerment, and poor customer experiences abound, buyers may continue in the shift to digital. Consumers will search for ease, quality, and service elsewhere. And eCommerce will be the great equalizer.

Report by Web Smith | Editor: Hilary Milnes | Art by Andrew Haynes | About 2PM

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