How will online retail change?

I've been thinking a lot lately.

With the major recession, people cutting back and making do with less - how will this change our retail landscape?

Certainly we've seen plenty of large brick-and-morter stores fold (Linen's N Things, Circuit City). The stores still standing are clearly retrenching - Macy's is aiming for a "Kohls with nicer stuff" level, Best Buy is scrambling to match Walmart's prices, etc. What we don't hear about are the smaller online businesses, many of which are struggling too I'm sure.

Which leads me to my major concern - can sites like Etsy survive? Will they have to change - adapt - to make it?

I love Etsy myself, both to sell my jewelry on, and to find neat and unique items. But I'll be honest, I've not purchased from anyone there in a while...and my sales have been few and far between lately.

When times were good, and money was flowing, the idea of buying a felted wool bowl, a plush monster robot, or some cute dangle earrings "just because" seemed fine. Neat and cool made for great gifts, until the recipients started to struggle to buy groceries or lost their jobs outright.

Will Etsy change? Will it move to more utilitarian items (DIY supplies, shirts, books) - and lose the whimsy? Will ACEOs and plush monsters disappear? Will the seller community shrink more and more as profit margins are eaten away by bargain hunters?

I hope not - we all need fun, whimsical stuff, especially at a time like this.

(Blueberry hat courtesy of WoolKnitsNBits, monkey pendant from PiecesOfMePendants, and Sparky the Chichilla plush from IckyDogCreations)