Investing genius Warren Buffett took the podium for this weekend's Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) shareholder meeting to share his wisdom for three full hours. This company's annual event is always a goldmine for investors who are willing to learn, and the online video-streaming version we got this time was no exception.

Consider, for a moment, the retail industry in 2020: COVID-19 containment efforts are pushing consumers into e-commerce shopping and leaving many traditional bricks-and-mortar store chains struggling to stay afloat. Here's what Buffett had to say about the current state of the retail sector.

Closeup photo of Warren Buffett, taken at the 2014 shareholder meeting.

Image source: The Motley Fool.

In Buffett's own words

Department stores looked good in 1966, but the world has gone against them. And we had a trading stamp business at one time and we stayed longer than anybody else. But the world left trading stamps behind and that's going to happen with some businesses. That's capitalism. And it will happen to some Berkshire businesses over the next 10 years, in the next 50 years.
We think we'll find more of them that will grow and that Berkshire will grow, but we do not think if you own a great many businesses, that every one is destined for success. That's why I suggest to people that they buy an index fund.

-- Warren Buffett, speaking at Berkshire Hathaway's 2020 annual shareholders' meeting

A brief analysis

Consumer habits are indeed changing as we speak, and it's becoming more and more difficult to run an old-school retail operation. In the last five years, department store giants Macy's (NYSE:M) and J.C. Penney (OTC:JCPN.Q) have seen their stock fall by 92% and 97%, respectively:

JCP Chart

JCP data by YCharts.

I call them "giants" out of habit. Macy's is barely a mid-cap stock today, and J.C. Penney is a penny stock with one foot in the bankruptcy office. Buffett, of course, has found ways to invest in a few different types of successful retailers in the modern era. Berkshire owns $1.3 billion worth of Costco (NASDAQ:COST) stock and $1.2 billion of (NASDAQ:AMZN), giving his company exposure to Costco's membership-based warehouse club model and to Amazon's e-commerce expertise.

Many of Berkshire's in-house retail businesses could learn a thing or two from Amazon and Costco, helping Buffett stave off the near-inevitable decay of outdated business plans.

Here's the main point

The larger lesson here is that times will change, and the only businesses that will survive for decades and centuries are those that are willing and able to adapt. Berkshire itself is a prime example of this, constantly molding and managing its portfolio of fully owned companies and minority investments to stay relevant in an ever-changing business environment.

Buffett's favorite holding period is "forever," but he was also quick to sell off all of Berkshire's interests in the airline industry as the coronavirus pandemic turned that sector upside down. Southwest Airlines (NYSE:LUV) and American Airlines (NASDAQ:AAL) might be best of breed in that sector, but Buffett has no interest in owning the top dogs in a sinking and unpredictable industry.

So Buffett backed out of his airline investments and increased his investment in index funds instead. He is also holding on to $137 billion in cash, ready to take action if the coronavirus unveils new investing opportunities by driving the markets down even further. That's another great idea.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.