Ex-Toys 'R' Us CEO: Most of the 'huge increases' in online shopping will 'stick' post-pandemic

Former Toys 'R' Us CEO Gerald Storch predicted on Wednesday that the “huge increases” in online shopping will “stick” after the coronavirus pandemic, which has crushed certain retailers while providing a boost to others.

U.S. retail sales rose 3.0% during this year’s expanded holiday shopping season from Oct. 11 to Dec. 24, according to a report by Mastercard Inc.,

The increase was powered by a pandemic-driven shift toward online shopping, according to Reuters. And U.S. e-commerce sales jumped 49% in this year’s holiday shopping season, according to Mastercard SpendingPulse report.

Storch told “Mornings with Maria” on Wednesday that he believes the trend of increased online sales will “absolutely” continue after the pandemic.

“People who were not as eager to shop online tried it, particularly older people who may have been a little averse to it and they found that it works and they’re going to keep doing it as we go to the future,” the former Target vice chairman said.

Storch also weighed in on which retailers he believes have done the best job at quickly adapting to focusing on online shopping. 

“It takes a long time to actually get it right and it takes a lot of money to compete online,” Storch noted.

“If you don’t buy the search terms on Google and Facebook, you’re invisible to people. If you’re not on Amazon as a reseller you’re invisible to most people.”

He then explained who he believes are the “big winners besides the obvious” companies including Amazon and Etsy.

Ticker	Security	Last	Change	Change %
TGT	TARGET CORP.	166.58	+2.11	+1.28%
WMT	WALMART INC.	59.27	-0.38	-0.64%

Storch noted Walmart and Target have also been doing well during the pandemic especially given “huge increases” as it pertains to online sales.

Walmart Inc. reported last month that third-quarter profit soared 56% from a year ago as customers stocked up on health and wellness products, groceries and electronics amid pandemic.

The Bentonville, Arkansas-based retailer earned $5.1 billion, or an adjusted $1.34 per share, as revenue rose 5.2% to $134.7 billion. Wall Street analysts surveyed by Refintiv were anticipating adjusted earnings of $1.18 per share on revenue of $132.2 billion.

E-commerce sales spiked 79% year-over-year while comparable sales rose 6.4% versus the prior year.

Target Corp. reported thriving digital sales and same-day services growth helped fuel a 46% year-over-year spike in third-quarter profit.

The Minneapolis-based discount retailer earned $1.01 billion, or an adjusted $2.79 per share, as revenue rose 21% to $22.34 billion. Wall Street analysts surveyed by Refinitiv were expecting adjusted earnings of $1.60 per share on revenue of $20.93 billion.

SIMON PROPERTY GROUP SUES GAP OVER $66M IN UNPAID RENT

Storch said the “real kinds of winners” were those retailers who “had the technology to drive you to pick up at the store” and who “stayed open during the days when only essential retailers could stay open” and were able to get traffic into their stores on top of “these huge online increases.”

Ticker	Security	Last	Change	Change %
HD	THE HOME DEPOT INC.	332.89	+0.06	+0.02%
LOW	LOWE'S COMPANIES INC.	228.79	-0.07	-0.03%

“Other winners are the home players like Home Depot and Lowe's with astounding numbers really by any kind of historical standards as people bought more for their homes,” Storch noted.

He went on to say that he thinks the “biggest losers” during the pandemic are apparel stores and department stores.

“They were losing already and now with nowhere to get dressed up and go, the pace of loss just accelerated,” Storch explained.

On Wednesday, Storch also provided insight into the future of shopping malls following a coronavirus recovery.

“Malls were egregiously overbuilt, probably two to three times the square footage that we needed,” Storch explained.

“People look at a town like Indianapolis, or something, and say, ‘Let’s put one in every quadrant,’ even when the quadrants didn’t have any people with money who could really shop in the mall.”

He went on to note that “malls were built on apparel, on clothing, that’s dying so that doesn’t work anymore so they [developers] said, ‘We have the answer, we’ll make them experiential places, like restaurants, movie theatres, places you like to hang out and walk around.’”

“Well that’s a dud during the pandemic, that’s for sure,” Storch said.

He went on to say that he is not convinced that malls will be coming back “any time soon now that people have learned maybe it’s not so smart just to hang out without a purpose as you walk around.”

Storch pointed out that the best malls will survive the pandemic “because they’re in best locations.”

He then noted that those malls became the center for the development around them and they are considered “the best real estate in town.” He then explained the future of the best malls.

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“What’s going to happen is they need to be redeveloped as places that you live with residents, places you work, places you eat with restaurants, places you play, places that you shop also,” Storch said.  “So basically you’ll kind of walk everywhere you want to go instead of having to take public transportation and deal with all that.”

“They’re still going to be incredible places … because the real estate is the best real estate in the world,” he added, pointing out that the other malls will have to be demolished and repurposed for other uses, including doctor offices for example.

“A large number of them have to close, but on the other spectrum that real estate for the A malls is incredibly valuable,” Storch explained.

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“These developers who were beaten down, they’re really smart people and they’re going to come out of this, the ones that survive, people like Simon for example, [will come out] even stronger than they ever were [before the pandemic.]”

Ticker	Security	Last	Change	Change %
SPG	SIMON PROPERTY GROUP INC.	140.37	-0.57	-0.40%

Mall operators, including Simon Property Group Inc., have been hurt by unpaid rent from retailers due to the pandemic that also led to a loss of thousands of shopping days.

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Fox Business’ Jonathan Garber contributed to this report.