Retail Giants Racked Up Big Profits in 2020 While Pandemic Ravaged Small Businesses

January 1, 2021 Updated: January 3, 2021

Retailing giants racked up huge profits in 2020, driven by a surge in online sales, while many small businesses struggled amid COVID-19 closures and shoppers leery about venturing into brick-and-mortar establishments.

Amazon’s third-quarter earnings report for this year, the most recent available, notes an operating cash flow of $55.3 billion for the 12 months prior to Sept. 30, up from $35.3 billion for the same period in 2019. Net sales were $260.5 billion for the three quarters ending Sept. 30, 2020, compared to $193.1 billion for the same period last year. Net income, a measure of profit, for the three quarters ending Sept. 30, 2020, was $14.1 billion, compared to $8.3 billion for the same period in 2019, a 70 percent increase.

According to Amazon’s forward guidance for the fourth quarter, the company expects net sales of between $112.0 billion and $121.0 billion, or growth between 28 percent and 38 percent compared to the fourth quarter of 2019.

“We’re seeing more customers than ever shopping early for their holiday gifts, which is just one of the signs that this is going to be an unprecedented holiday season,” said Jeff Bezos, Amazon founder and CEO, in a statement.

Walmart saw its operating income, another measure of profit, grow by 11.9 percent to $17.6 billion for the nine months that ended on Oct. 31, 2020, compared to the same period last year.

Epoch Times Photo
A worker assembles a box for delivery at the Amazon fulfillment center in Baltimore, Maryland on April 30, 2019. (Clodagh Kilcoyne/File Photo/Reuters)

Retail sales in the United States rose 3 percent during this year’s expanded holiday shopping season powered by a pandemic-driven shift toward online shopping, a report by Mastercard Inc. said on Dec. 26. E-commerce sales in the United States jumped 49 percent in this year’s holiday shopping season, from Oct. 11 to Dec. 24, according to the Mastercard SpendingPulse report, underscoring the role of the pandemic in transforming customers’ shopping habits. The report noted that options such as buy online and in-store pickup, as well as contactless technologies were key for retailers.

Small businesses, meanwhile, especially ones in the leisure and hospitality industries and retailers that struggled to adapt to changing shopping habits, suffered amid pandemic-related lockdowns and restrictions.

Commerce platform Womply, which tracks local businesses, reported that restaurant revenues have dropped by about 44 percent in 2020 compared to last year, while retail spending dropped 4 percent in the same timeframe.

New government data shows that the pandemic has had a moderate-to-large negative impact on over three quarters of the nation’s small businesses, with the hardest-hit being those in accommodation and food services. The most recent Small Business Pulse Survey, which collects real-time information on how small businesses are being impacted by the CCP (Chinese Communist Party) virus, featured data gathered from Dec. 21 to Dec. 27, the U.S. Census Bureau said in a release.

While the national average of small businesses that reported a “large negative impact” of the virus on operations stood at 30.4 percent in the reporting period, over 67 percent of small businesses in accommodation and food services said they have suffered a major blow. Retail fared better, with 25.5 percent of businesses in this sector indicating a “large negative impact.”

Nearly 90 percent of small businesses in the accommodation and food services sector reported a moderate-to-large negative impact from the pandemic, while that figure stood at 67.7 percent for small retailers.

According to Yelp’s September 2020 economic impact report, nearly 98,000 Yelp-listed small businesses have closed permanently in the United States since March 1. Of these, the restaurant industry was the most impacted, with 32,109 closures as of Aug. 31, with 19,590 of these closures permanent. Retail and shopping was closely behind, with 30,374 total closures within the same timeframe, 17,503 of which were permanent.

“Yelp closure data shows that businesses providing home, local and professional services have been able to withstand the effects of the pandemic particularly well,” the report states. “But despite bright spots in some sectors, restaurants and retail continue to struggle and total closures nationwide have started to increase.”

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