COVID-19 continues to disrupt the retail industry from all angles. New challenges are arising for retailers as stores continue their reopening process, bankruptcies force tough decisions and we move closer toward major annual shopping events, like back-to-school, Black Friday and Cyber Monday.
And with many experts assuming we’ll still be in some version of lockdown for the foreseeable future, retailers are anticipating and trying to plan for a year-end shopping season like no other.
With these challenges in mind, here are three prominent themes we’re seeing across publications:
Bankruptcies Continue + Retailers Reorganize
In our last post, we highlighted how major retail brands – including Neiman Marcus, J.Crew and J.C. Penney – filed for bankruptcy as a result of continued struggles that were exacerbated by the pandemic. The list of bankruptcies has only grown since then, adding Lord & Taylor, Men’s Wearhouse and Jos. A. Bank, as retailers continue to grapple with the current reality.
As retailers reorganize their operations to stay afloat, many are being forced to make tough decisions. For instance, Neiman Marcus decided in July to vacate its extravagant new location at Hudson Yards in New York City. In barely a year since launching, the Hudson Yards location no longer made sense from a profitability standpoint, given its foot traffic relied so heavily on restaurants and office space.
- The New York Times, August 2, Lord & Taylor Files for Bankruptcy as Retail Collapses Pile Up, Sapna Maheshwari
- The Wall Street Journal, August 2, Men’s Wearhouse Parent Files for Bankruptcy, Aisha Al-Muslim
- CNBC, July 24, Bankrupt Neiman Marcus to vacate the Hudson Yards mall in New York, Lauren Thomas
- MarketWatch, July 24, Ann Taylor parent joins other retailers that have recently filed for bankruptcy. Here are a few things they have in common, Tonya Garcia
Back-to-School Creates Uncertainties for Retailers and Consumers Alike
As parents and students prepare for a new school year, uncertainty looms around how it will look in 2020. Some schools plan to continue with remote learning programs while others are returning students to their classrooms, albeit in a much different format than previous years.
Retailers are feeling this uncertainty. Many parents are not only unsure when they’ll shop for back-to-school, but also expect to buy fewer traditional school supplies this year. That said, according to a Deloitte study, virtual class formats are also driving up sales for electronics as all students – not just those in college – now require personal computers. The study found that technology spending for K-12 is expected to rise 28% this year.
- MarketWatch, July 18, The back-to-school shopping season will be a ‘dud’ one analyst says, but the NRF is forecasting a record breaker, Tonya Garcia
- Business Insider, July 16, Parents and students are poised to spend more on back-to-school shopping than ever before despite uncertainty about schools reopening, Madeline Stone
- CNBC, July 15, Back-to-school spending could hit a record as parents buy costly technology for kids at home, Lauren Thomas
- Bloomberg, July 7, Retailers Face Unpredictable Back-to-School Shopping Season, Jordyn Holman & Drew Hutchinson
Retailers Plan for an Unusual Holiday Season
July is usually when retailers prepare for major shopping events like Black Friday and Cyber Monday.
However, Walmart has made the decision to close its doors on Thanksgiving this year, ending the company’s 30-year tradition. Other retailers, such as Target and Dick’s Sporting Goods, followed suit, announcing similar plans soon after. These announcements point to an industry shift in which retailers are prioritizing customer safety and e-commerce over their in-store doorbusters.
Additionally, Black Friday – a shopping holiday traditionally focused on getting as many shoppers in the door as possible – will see significant changes. Many retailers are already talking about limiting store hours, creating temporary product displays outside and enhancing curbside pickup – a far cry from the long lines and early mornings we’re all accustomed to.
- Chain Store Age, July 31, The holidays are coming early – is your enterprise ready?, Dan Berthiaume
- The Wall Street Journal, July 21, Covid-19 Prompts Walmart to Close Stores on Thanksgiving Day, Sarah Nassauer
- Bloomberg, July 31, Black Friday Is Now in October, in a Parking Lot or Online, Matt Boyle
- CNN, July 27, Target and Dick’s Sporting Goods will close stores on Thanksgiving Day, Nathaniel Meyersohn
What headlines stood out to you this month? We’ll continue to closely monitor the media and market sentiment amidst the COVID-19 crisis and share our insights. In the meantime, message me or send me an email (firstname.lastname@example.org) if you’d like to receive our weekly summary and insights!