This article originally appeared on Medium on May 18, 2020.
Media Bias? But Not What You Think It Is
Frank V. Cespedes
In the current crisis, news outlets have doubled down on a certain narrative about online channels and virtual business models. But the evidence is not so clear.
The media are often accused of political bias. But news outlets reflect many political beliefs in a fragmented media environment. However, an almost across-the-board bias is how news media talk about online channels, and the pandemic has exacerbated that bias. It’s become routine to assert that because social distancing forces us to do more buying online and communicating thru social media, this will accelerate a permanent big shift after the crisis to more ecommerce and virtual business models.
In the first months of social distancing in the U.S., online sales at many retailers indeed surged compared with the year-earlier period — and so did in-store sales and sales of toilet paper, puzzles, and walkie-talkies.[i] It’s not clear what we learn from panic buying, contagion fears, and enforced isolation. So let’s look at what was happening online before the virus of 2020.
Ecommerce has been here for 30 years. Books.com was selling online while Jeff Bezos was working on Wall Street. After decades free from sales taxes, ecommerce was 11.4% of U.S. retail sales in 2019, according to the Department of Commerce.[ii] Meanwhile, social media usage had been essentially flat over the previous four years, had declined among Americans less than 35 years old, and the only group using Facebook more were people 55 or older.[iii] As a marketing medium, online channels were cluttered and increasingly viewed with suspicion as media attention to hackers raised awareness of cybersecurity issues. Combined with the ability to block ads, the rapidly growing costs of acquiring customers online,[iv] the experience of “Zoombombing,” and controls on consumer data by EU regulators and others, it’s unclear how much buying and selling will happen online in the future.
Similarly, most news reports about retailers begin with a familiar trope: “No industry is failing faster than retail. . . .” The number of malls in the U.S. was about 300 in 1970, 1,000 by the year 2000, and 1,200 by 2019, and outlet centers went from a handful to about 400 during the same period.[v] Most mall closings thru 2019 were older shopping centers that lacked trendy retailers, lively restaurants, and other things associated with a good shopping experience. Demographics change and so does retail. A study of closings found that newer shopping centers, not ecommerce, were the most common cause.[vi] As the old adage puts it, the three most important things in retailing are location, location, location.
In the U.S., spending in retail stores increased every year from 2009 to 2019, an average of 48 million square feet retail space was built annually, mall traffic also increased(and was at a multi-year high in 2019), while base rental prices and sales per square foot also increased steadily and occupancy rates never dipped below 90% during the same period.[vii] Years before the current crisis, times were already bad for Sears, Kmart, Payless Shoes and others with too many stores, too much debt, and merchandising that lagged demographic and stylistic changes. As in any market, there has always been disruption in the sense that some figure it out and others don’t. Check out departstoremuseum.org for an online tour of defunct retailers over the past century and more . . . and their innovative successors.
In fact, before the virus, the biggest retail trend was “clicks and bricks,” even for once pure-play ecommerce firms like Birchbox, Bonobos, Casper Sleep, Warby Parker, Wayfair and — yes, indeed — Amazon, among others. Yet the press has generally followed the Liberty Valance mode of reporting about retailers: “when the legend becomes fact, print the legend.”
One reason this happens may be attributable to the experience of journalists in the 21st century. The U.S. newspaper industry employed more than 400,000 people and recorded its highest revenues ever in the year 2000 (at the time, more people and money than the movie industry), when print advertising was still a strong source of revenue. Print media firms then experienced an average decrease in ad revenue of 9% annually from 2010 to 2017.[viii] By 2019, employment had fallen by more than 60%, with layoffs in digital media companies as well as newspapers.
To put this in perspective: the employment decline for journalists in the 21st century was deeper than job losses over the past three decades in the coal mining, iron, steel, or fishing industries.[ix] In 2019, even Starbucks stopped selling The New York Times, Wall Street Journal, and USA Today.
Journalists have seen their industry and livelihoods negatively disrupted by technology in a short time, and certainly notice that Jeff Bezos can buy a national news outlet with a digital check from his personal account. It’s then easy to assume this must be happening everywhere. That’s understandable, but it’s still a bias and leads to publishing stories that fit an assumed narrative. Meanwhile, if you’re in business, you must make decisions now about the marketing and sales investments relevant during and after the crisis.
Good journalism, like good management, asks relevant questions and provides context. Will social distancing make people more eager to transact online, or simply demonstrate the limitations of communicating virtually? Epidemics were a recurring norm for millennia.[x] Yet, buying and selling have been social as well as economic transactions since the Roman Forum and thru decades of internet use. Will months-long confinement significantly change that deep-rooted human behavior? Let’s get healthy and find out.
Frank Cespedes teaches at Harvard Business School
[i] Sarah Nassauer, “Stockpile Surge Boosts Sales at Walmart,” The Wall Street Journal (April 4–5, 2020): B3; and Sarah Krouse, “Copy That: Walkie-Talkies Are No Longer Over and Out,” The Wall Street Journal (April 13, 2020: A1.
[iii] Edison Research, 2019 Social Habit Report: https://www.convinceandconvert.com/social-media-research/social-media-usage-statistics.
[v] Data from International Council of Shopping Centers as cited in “Mall Owner Bets Outlet Bargains Can Thrive Online,” The Wall Street Journal (October 7, 2019).
[vii] “Misleading Headlines In the Mall Space — Things Are Actually Much Better”: https://seekingalpha.com/article/4288734-misleading-headlines-mall-space-things-actually-much-better.
[ix] Evan Horowitz, “Even fishing and coal mining are not losing jobs as fast as the newspaper industry,” The Boston Globe (July 3, 2018); Gerry Smith, “Journalism jobs cut at highest rate since 2009,” The Boston Globe (July 1, 2019).
[x] William H. McNeill, Plagues and Peoples (Doubleday, 1976).