Retail therapy time is over

Retail therapy time is over

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The retail sector is revolving around an adapt to survive model and it’s looking difficult out there for retailers that aren’t getting with the times. Covid-19 brought a shift as more people flocked to conduct purchases through online shopping channels — which means that it’s a bit tough for those that haven’t quite integrated e-commerce into their operations fully. Saudi’s Savola Group, a parent company with holdings in food products, credits that shopping behavior shift alongside higher operating expenses as a few of the reasons for its recent 45% drop in profits.

The company isn’t alone as e-commerce giant, eBay (EBAY) also saw a mixed earnings release. The platform saw a 53% YoY decrease in its net income but this is largely due to the above-average figures it saw in 2020, when the pandemic’s impact was quite high on e-commerce. As a result, eBay’s net revenues were quite healthy and saw a 111% increase, driven by new features added to the site that provide a better buyer-seller experience.

Why it matters

Savola’s dip in earnings is mostly a supply-side issue while eBay doesn’t have much to worry about given that, contextually speaking, its figures are still quite good. As e-commerce trends and consumer spending have recovered to pre-Covid levels, though, the obstacle becomes for companies like Savola to adapt their business models accordingly. 

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