Retail Stores in the US Temporarily Close Down Amid Coronavirus Outbreak

Many retail stores around the US are forced to shut their doors and turn off their lights to prevent further spreading of the coronavirus. Many other retail stores are closing down due to lack of inventory caused by the wave of panic shopping that hit retail stores within the last two weeks.

In previous years, many retail stores had shut down due to bankruptcy. According to Deborah Weinswig, CEO and founder of retail advisory and research firm, Coresight Research, the rate at which retail stores are closing this year would be “double what we saw last year… I think that is already in motion... if Covid-19 stays longer, it [closures] will be greater.” She suspects that there may be over 15,000 store closures announced by retailers, and the majority of the closures would be as a result of the outbreak.

Retail stores that have voluntarily shut down for the time being include Nike, Urban Outfitters, Glossier, Patagonia, Anthropologie, Free People, Abercrombie &Fitch, Gollister and Golly Hicks, Everlane, Reformation, Apple, Lululemon, Lush Cosmetics, Outdoor Voices, REI, and Under Armour. Major retail stores like Nike and Urban Outfitters have announced that employees would receive their payments for lost shifts during the period of the closure. Other major retailers like Walmart are yet to announce a temporal closure but have cut down opening and working hours. Either way, employees get compensated for lost shifts.

All retail stores announcing closure have emphasized that their online stores remain open although shipments and delivery may be delayed for some like Patagonia due to employees working remotely. While employees who work in other departments in the retail stores can continue their work from home.

Towards the end of last month, Apple (APPL) had announced that its retail locations in China would be closed but has since reopened them considering that a majority of its supply chain is in China. It has since announced that its other stores in the rest of the world would be closed excluding China.

Since its entrance into the US, nearly 3,000 coronavirus cases have been reported and Health experts encourage people to avoid large gatherings and maintaining a six feet distance from other people, ‘social distancing’.

Like the stock market and financial market, retail stores are in for a plunge as the closures would bring business to a halt. For example, a large percentage of Nike’s 2019 company growth was generated from direct consumer sales at its Nike retail stores, and factory outlets. There is no doubt that companies like Nike would experience slow company growth in the next quarter due to the closure. However, what seems like a temporal loss could eventually turn out to be best for retail stores in the long run. Sam Poser, senior analyst at Susquehanna International Group affirms this, that “while retailers may suffer financially in the short term, the closures are a smart long term business decision.” He further added, “how important are a few days of business versus the health of your people, the health of your employees and customers, and your brand reputation?... You want to be around and strong, with your people and your customers when the dust settles.”