Coronavirus Finishes the Retail Reckoning That Amazon Started hurt many retailers. Coronavirus will finish some of them off.

Even as malls and stores begin to reopen, the Covid-19 pandemic has taken a toll on an industry already battered by the shift to online shopping. More than two million retail jobs disappeared in April as many stores closed. The damage will be clear Friday when the U.S. government reports what is expected to be one of the worst months for retailers since World War II.

Roughly 100,000 stores are expected to close over the next five years— more than triple the number that shut during the last recession—as e-commerce jumps to a quarter of U.S. retail sales from 15% last year, UBS estimates. The turbocharged shift to e-commerce is expected to further depress profit margins and accelerate a shakeout in a country that already had too much bricks-and-mortar space for an increasingly digital world.

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Just this month, luxury retailer Neiman Marcus Group Inc., apparel seller J.Crew Group Inc. and Stage Stores Inc., an operator of rural department stores, have filed for bankruptcy protection. J.C. Penney Co. is teetering on the edge after missing two interest payments. Collectively, they operated roughly 2,500 stores last year and employed nearly 120,000 people.

“If this isn’t the retail apocalypse I don’t know what would be,” said Sarah Wyeth, the lead analyst for retail and restaurants at S&P Global Ratings. Ms. Wyeth estimates that there is a 50% chance that 19 retailers tracked by S&P will default on their debt. Five retailers defaulted during the 2008 recession.

The pain is being felt acutely by mall-based apparel chains and department stores that had limped along before the pandemic. J.Crew has lost money for six straight years. Penney hasn’t booked an annual profit in nine years.

But those chains that were popular before the pandemic are drawing shoppers back as restrictions are lifted. After being largely stuck at home, people this week donned masks and lined up for temperature checks to enter Apple Inc. stores in Charleston, S.C., and flocked to luxury shops in Paris.

Sonia Syngal, who took over as CEO of Gap Inc. in mid-March, said the company will likely reopen fewer stores for its flagship Gap brand. “We’ll be using this as an opportunity to refashion the company for what we want it to look like over the next 50 years,” Ms. Syngal said in an interview last week. The owner of Old Navy, Banana Republic and other chains had more than 3,300 stores world-wide last year.

At this time last year, 25-year-old Brittany Croffie was buying new dresses, sandals and sunglasses for coming birthday parties, summer barbecues and weekends out at bars. In the last four weeks her only purchases have been a new laptop and skin-care products, said Ms. Croffie, a physical-therapy technician in Maryland.

She said her habit shift is likely to stick longer-term. “I have been saving a lot of money since I haven’t been buying clothes,” said Ms. Croffie. “It’s definitely teaching me how I can spend on other things that are worthwhile, like my experiences when I’m going out.”

Eventually, the world will return to normal and there will still be people who view shopping in stores as entertainment and want to try on clothes before they buy them. But some chains won’t have enough cash to come out the other side.

Many retailers were on shaky ground before state and local governments required people to shelter at home. Roughly three-quarters of the retailers tracked by S&P had their debt rated junk before the pandemic, including familiar names like Abercrombie & Fitch Co. and Foot Locker Inc. Macy’s Inc. lost its investment-grade rating in February.

The rise of and online shopping, which gave consumers price transparency and free shipping, chipped away at profits. Earnings before interest and taxes fell to 7% of sales last year, from 11% in 2012 at a group of 25 large retailers followed by consulting firm AlixPartners LLP. Over that period, e-commerce increased to 18% of sales from 10%.

Patrik Frisk, the chief executive of sportswear maker Under Armour Inc., said the next two years will force difficult choices at many brands as more sales shift online. “There’s still a lot of stores and there’s still a lot of square footage, so there are certainly going to be winners and losers in this environment,” Mr. Frisk told investors this week. “That’s not just in our sector. I think that’s in general in retail.”

UBS estimates the number of U.S. retail stores will fall to 782,000 over the next five years from 883,000 last year. That is a far bigger culling than during the 2008 recession, when 28,455 stores closed.

“Going back over the last 20 years, the worst year for closures was 2009 when 2% of stores closed,” said UBS apparel and footwear analyst Jay Sole. “Our forecast calls for 2% of stores to close every year into 2025.”

Before the pandemic, Macy’s said it would close about 125 of its 580 department stores over the next three years. It temporarily closed them all in March. The company has started reopening many of its stores this month, though its chief executive expects the locations that come back first to do less than a fifth of their normal sales volume initially.

“There will still be a real role for stores,” Macy’s CEO Jeff Gennette said in a recent interview, but added the digital business will become even more important and a bigger part of his company’s sales. and Walmart Inc., which were gaining share, are expected to continue to do so.

Walmart has started using 2,400 of its around 4,700 U.S. stores to gather then ship online orders, up from 130 stores four weeks ago, according to people familiar with the situation. It is also planning to start offering home delivery of some pharmacy items, such as prescriptions, one of the people said.

Roadie Inc., an Atlanta-based firm that links businesses and people to a network of crowdsourced delivery drivers, has added more than 3,000 retail store locations since April 1, said Chief Executive Marc Gorlin. “The retailers we’re already working with are opening up additional delivery capacity at warp speed,” he said, “and new customers are asking us how quickly we can ramp up.” 

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