Men work at a distribution station in the 855,000-square-foot Amazon fulfillment center in Staten Island, New York. Johannes Eisele | AFP | Getty Images

If Amazon dominated the retail market before the coronavirus pandemic began, there's good reason to believe it'll emerge from the crisis even stronger. Under orders to stay home, millions of Americans have turned to online marketplaces like Amazon to order much-needed essentials like toilet paper, food, hand sanitizer and cold medicine. In lieu of neighborhood supermarkets, consumers are relying on online grocery delivery services like Amazon Fresh, resulting in a cascade of delays and out-of-stock notices amid the unexpected rise in demand. Amazon has hired more than 100,000 new warehouse and delivery workers since March to help manage the surge in orders, and it's planning to bring on 75,000 more workers. The unprecedented demand has propelled shares of Amazon to fresh highs. The stock hit an all-time high on April 16 and is up more than 28% for the year, compared with an 11% decline for the S&P 500. Investors have flocked to Amazon and other stay-at-home stocks like Netflix and Zoom in recent months, as consumers have come to depend on their services amid the lockdown.

The outlook is brighter than ever for Amazon. But its ascent is occurring against a worrying backdrop of financial turmoil in the retail industry and the broader economy. Brick-and-mortar stores that remain open face vanishing foot traffic, while other retailers across the U.S. have closed stores and furloughed thousands of employees. Smaller or non-essential businesses have also shut their doors and are hoping they'll be able to stay afloat long enough to reopen. Consumer spending has declined rapidly, with retail sales falling a record 8.7% in March. Many shoppers have limited themselves to making only essential purchases, while others are generally cautious about all purchases, having found themselves included in the 22 million Americans who filed for unemployment benefits in the last four weeks. Retailers that shut their doors have continued to sell online, but it hasn't translated to a surge in sales like that experienced by Amazon. A survey of nearly 100 digital retailers by CommerceNext, an e-commerce marketing and consulting firm, found 64.5% of businesses reported that e-commerce activity was down during the crisis. Taken together, the retail industry's troubles have generated concern about what the competitive landscape will look like when the pandemic subsides. Aside from Walmart, Target and Costco, will anyone else be left to compete with Amazon? The short answer is yes. Major retailers who sell goods outside of apparel and furniture – two of the hardest hit categories – will likely weather the downturn, along with many direct-to-consumer brands that were doing well before the pandemic, said Andrew Lipsman, a principal analyst at eMarketer. Instead of bulldozing the entire retail market, the pandemic is more likely to accelerate the decline of the "boring middle of retail," such as Sears, J.C. Penney, Macy's and Kohl's, Lipsman said. The days of department stores being a "one stop shop" for consumers are long gone. Now, their chances of rebounding after the pandemic have gotten slimmer, which raises the specter of bankruptcy, as well as a cash squeeze. Cowen analysts estimate that U.S. department stores have enough liquidity to last about five to eight months with extended store closures. "A lot of what these businesses really needed to do was, when times were good, be able to invest some of those profits to make their businesses more relevant," Lipsman said. "They're not going to be able to make those investments now."

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