Wednesday, December 16, 2020

The High Cost of COVID-19 Lockdowns on America's Retailers

With the "coronadoom apocalypse" once again rearing its ugly head, governments are increasingly looking at and implementing another round of lockdowns.  Thanks to research by RetailDive, we have a sense of the massive impact of COVID-19-related lockdowns on America's retail sector.  


Let's look at some additional data to help us put into context the impact of the COVID-19 pandemic on America's retail sector.  In 2019, 17 major U.S. retailers filed for bankruptcy as shown on this listing:


In total, 9,548 retail stores were closed during 2019, setting a new record according to Coresight Research.


As we entered 2020, America's retail sector was already distressed given high levels of debt and cash flow problems because of lowered sales.  This year is proving to be an even worse year than 2019 as shown on this list of the 29 retailers that have filed for bankruptcy so far in 2020:


Here are the number of stores for each retailer that has declared bankruptcy so far in 2020:


Guitar Center - 297


Furniture Factory Outlet - 68


Century 21 - - 13


Stein Mart - 283 


Tailored Brands - 1450


Lord & Taylor - 47


Ascena - 2764


The Paper Store - approximately 80


RTW Retailwinds - 553


Muji USA - 19


Sur La Table - 130


Brooks Brothers - >250 including factory stores


G-Star Raw - >400 franchise stores worldwide, 30 outlet stores


Lucky Brand - 251


GNC - >4800 including 1000 franchise in the United States


Tuesday Morning - 490


Centric Brands - 96, 344 shop-in-shop locations


J.C. Penney - 846


Stage Stores - 786


Aldo - 850 in North America


Nieman Marcus - 38, 2 Berfdorf Goodman, 5 Last Call


J. Crew - 506


Roots USA - 7


True Religion - 87


Modell's Sporting Goods - 137


Art Van Furniture - 176


Bluestem Brands - online


Pier 1 - 540 in United States and Canada


SFP Franchise Corp - 254 in United States and Canada


As you can imagine, this means unemployment for hundred of thousands of retail employees who have little chance of regaining employment at another beleaguered bricks and mortar retailer as you can see on this table from the U.S Bureau of Labor Statistics which shows that the number of unemployed Americans in the wholesale and retail sector has jumped from 732,000 in October 2019 to 1.333 million in October 2020:

While some of these retailers are attempting to reopen once they have restructured their debts or sold themselves to a private equity group, the future looks grim for their former employees no matter what may transpire, particularly if we are in an economic environment where rolling lockdowns continue for any length of time.  On the other hand, as the pandemic has showed us, Amazon and Walmart are more than willing to step up where America's retailers have failed.

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