COVID-19 accelerated the rationalization of retail’s over-stored environment and the pace of closures isn’t expected to slow down. “We’re not done yet. It’s going to get tougher. When the volume of purchases drops dramatically after Christmas, the expenses remain,” Terry Lundgren, Macy’s former CEO, told CNBC. He says retailers who have a weak balance sheet today aren’t going to get relief in January.
On the upside, there will be opportunities to grow again, green shoots, from that perspective of store closures and that would be soon, Lundgren added. Before the pandemic, expansion of online shopping had dragged down in-store traffic, while during the pandemic accelerated online shift and decimated in-store selling for many retailers. As much as 40 major retailers have filed for bankruptcy and more than 11,000 store closures were announced in 2020. US retail sales of apparel and accessories fell 30 per cent year on year from January through October that may lead to substantial store closure announcements and bankruptcy filings.
It really comes down to how long COVID persists and if we see vaccine roll out and a lot of cases come down, people start shopping more, that will alleviate some strain on the retail sector.
