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COVID-19

As J.C. Penney liquidates merchandise, other retailers scramble to compete

Andy Uhler Jun 24, 2020
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J.C. Penney filed for bankruptcy in May. Justin Sullivan/Getty Images
COVID-19

As J.C. Penney liquidates merchandise, other retailers scramble to compete

Andy Uhler Jun 24, 2020
Heard on:
J.C. Penney filed for bankruptcy in May. Justin Sullivan/Getty Images
HTML EMBED:
COPY

J.C. Penney announced Monday that it’s set to close 13 more stores for good. The company filed for bankruptcy in May and is in the process of liquidating merchandise in more than 130 stores right now.

Those rock-bottom prices have other retailers, which are often next door to J.C. Penney stores in malls, scrambling to figure out how to compete.

Department stores have to move inventory quickly.

“Frankly, milk is a lot like merchandise,” said Bob Phibbs, who runs the consultancy The Retail Doctor. “It spoils and smells bad the longer you hold on to it. And that’s the story of retail.”

He said that can be even tougher if there’s a liquidation sale happening next door.

“Liquidation is often good for those that are liquidating but it’s not so good for the other retailers around it,” said Neil Saunders, managing director of retail at Global Data.

In this case, other retailers like the mall anchors Macy’s and Nordstrom.

“What Penneys is doing is robbing demand from the future with a liquidation sale,” Phibbs said.

He said that’s on top of already-suppressed demand because of COVID-19. Along with J.C. Penney, J. Crew and Neiman Marcus also filed for bankruptcy amid the pandemic.

Phibbs said as more consumers change their habits and order things online, traditional retailers will continue to find it harder to compete.

COVID-19 Economy FAQs

So what’s up with “Zoom fatigue”?

It’s a real thing. The science backs it up — there’s new research from Stanford University. So why is it that the technology can be so draining? Jeremy Bailenson with Stanford’s Virtual Human Interaction Lab puts it this way: “It’s like being in an elevator where everyone in the elevator stopped and looked right at us for the entire elevator ride at close-up.” Bailenson said turning off self-view and shrinking down the video window can make interactions feel more natural and less emotionally taxing.

How are Americans spending their money these days?

Economists are predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated. A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut. But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers. A lot of people enjoy browsing in stores, especially after months of forced online shopping. And another area expecting a post-pandemic boost: travel.

What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?

Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”

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