COVID-19 Issues Mount for Retailers
How will retail store closures fare due to COVID-19? When Americans emerge from their homes, it may be to a completely new normal, particularly in the retail shopping sector. According to GlobeSt, Gap announced that, despite several tough choices, some retail store closures are likely in the months ahead.
Aside from not paying rent for North American stores in April, a $115 million savings, Gap also:
- Furloughed workers
- Suspended stock repurchases and dividends
- Cut executive pay
- Reduced capital expenditures by $300 million
- Tapped its entire $500 million revolving credit
100,000 Retail Store Closures by 2025
Also, a recent client note from UBS projects as many as 100,000 retail store closures by 2025. This is a dramatic increase from the 9,548 stores that shuttered in 2019 (according to Coresight). That’s partially because consumers have already shifted the vast majority of their buying to online platforms, and they will need some time before they feel safe and comfortable visiting crowded shopping venues again.
Some Retail Stores Emerge as Winners
The potential good news is that 91% percent of consumers say they plan to visit restaurants, movie theaters, gyms, salons, stores and banks as stay-at-home orders are lifted, with about 32% reporting that they plan to shop more after the pandemic ends, according to a recent survey by Momentfeed. Big winners will include big box retail stores such as Target, Costco and Walmart, which are already seeing a boost in sales during the pandemic.
The Momentfeed survey also showed that 28% of consumers plan to continue increasing their online shopping. As online shopping continues to impact bricks-and-mortar retail stores, the supply chain will have to shift to keep up with more deliveries to more locations than it had previously. This may result in a higher demand for warehouse space as retailers work to keep inventory close to their customers and available for quick delivery.