Retail Rebound Could Soon Run Aground

In one of the more ironic turnarounds in modern business times, large retailers benefitted enormously from the COVID-19 pandemic, a most stressful period that encompassed months of rolling lockdowns, business shutdowns, and stay-at-home living conditions across much of the country followed by a slow and staggered resumption of normal life. What was a painful episode in so many ways for millions of Americans became an inadvertent windfall for retail chains able to rise to the moment during the pandemic, and many have continued to enjoy improved prosperity even as COVID-induced lifestyle restrictions have mostly disappeared.

Prior to COVID-19, much of the U.S. retail sector struggled with persistently weak sales growth and modest or meager profitability, as consumers came to expect deals galore and other perks (such as rewards programs and free shipping and returns) from retailers before they would step up their spending. This dynamic tended to benefit the largest