COVID-19

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

Andy Uhler Jun 24, 2020
Heard on: Marketplace Morning Report
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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
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

New COVID-19 cases and deaths in the U.S. are on the rise. How are Americans reacting?

Johns Hopkins University reports the seven-day average of new cases hit 68,767 on Sunday  — a record — eclipsing the previous record hit in late July during the second, summer wave of infection. A funny thing is happening with consumers though: Even as COVID-19 cases rise, Americans don’t appear to be shying away from stepping indoors to shop or eat or exercise. Morning Consult asked consumers how comfortable they feel going out to eat, to the shopping mall or on a vacation. And their willingness has been rising. Surveys find consumers’ attitudes vary by age and income, and by political affiliation, said Chris Jackson, who heads up polling at Ipsos.

How many people are flying? Has traveled picked up?

Flying is starting to recover to levels the airline industry hasn’t seen in months. The Transportation Security Administration announced on Oct. 19 that it’s screened more than 1 million passengers on a single day — its highest number since March 17. The TSA also screened more than 6 million passengers last week, its highest weekly volume since the start of the COVID-19 pandemic. While travel is improving, the TSA announcement comes amid warnings that the U.S. is in the third wave of the coronavirus. There are now more than 8 million cases in the country, with more than 219,000 deaths.

How are Americans feeling about their finances?

Nearly half of all Americans would have trouble paying for an unexpected $250 bill and a third of Americans have less income than before the pandemic, according to the latest results of our Marketplace-Edison Poll. Also, 6 in 10 Americans think that race has at least some impact on an individual’s long-term financial situation, but Black respondents are much more likely to think that race has a big impact on a person’s long-term financial situation than white or Hispanic/Latinx respondents.

Find the rest of the poll results here, which cover how Americans have been faring financially about six months into the pandemic, race and equity within the workplace and some of the key issues Trump and Biden supporters are concerned about.

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