E-commerce will continue to dominate physical retail into the future as more brands seek out DTC (direct to consumer) strategies to reach changing consumer preferences, according to a new analysis from Morningstar.

Athletic and footwear brands were hit particularly hard early on in the pandemic, according to a new analysis of the sectors by Morningstar, which resulted in billions of dollars in inventory remaining locked in unopened stores. Share prices of many sportswear companies slumped by 50% or more as a result. But in the second half of 2020, demand for athleisurewear skyrocketed, all but eliminating liquidity concerns for manufacturers.

Online shopping took center stage during the course of the pandemic, as COVID-related restrictions shuttered shopping centers and physical retail store operations. Morningstar analysts predict DTC operations, both via e-commerce and bricks-and-mortar retail, will be the future for apparel manufacturers, noting that DTC allows for "better connections to consumers, data collection, and higher margins."