COVID-19

Retail decline continues with bankruptcies and closures sped up by pandemic

Justin Ho Sep 29, 2020
Heard on: Marketplace
HTML EMBED:
COPY
A pedestrian walks past a permanently closed Jos. A. Bank clothing store in August in San Francisco. Tailored Brands, the parent company of Jos. A. Bank and Men's Wearhouse, is one of 29 big retailers to file for bankruptcy this year. Justin Sullivan/Getty Images
COVID-19

Retail decline continues with bankruptcies and closures sped up by pandemic

Justin Ho Sep 29, 2020
A pedestrian walks past a permanently closed Jos. A. Bank clothing store in August in San Francisco. Tailored Brands, the parent company of Jos. A. Bank and Men's Wearhouse, is one of 29 big retailers to file for bankruptcy this year. Justin Sullivan/Getty Images
HTML EMBED:
COPY

It’s been a very tough year for the retail industry. A report out Tuesday from the accounting consultancy BDO USA said 29 big retailers filed for bankruptcy protection through August.

And if bankruptcies continue at that pace, the number could rival the bankruptcies of 2010, after the Great Recession. For retailers, the last three months of this year will be even more critical than usual for their survival as they look for some hope around the holidays.

The report found that bankrupt retailers have closed almost 6,000 stores this year. Retailers that have seen the most bankruptcies sell apparel — products we just haven’t been buying much of during the pandemic.

Stores in malls have been especially hard hit.

“If you’ve got [800] or 900 stores spread across malls in the United States, you probably need about half that many stores,” said Brian Yarbrough, an analyst with Edward Jones.

He said the big box retailers are spending more to attract consumers who just aren’t going to the mall and want to shop online.

“You’re seeing the Walmarts and Targets of the world invest billions of dollars a year in technology,” he said. “These small companies can’t keep up.”

But many retailers rely on their physical locations and are struggling to stay competitive and attract shoppers during a critical holiday season.

David Berliner, a partner at BDO, said that could include services like contactless checkout or in-store pickup for online orders.

“Whatever they can do to make consumers feel safe going into these brick-and-mortar stores,” he said.

Berliner said what retailers need to figure out is what makes sense for a physical store to be profitable.

“To make sure the brick-and-mortar stores are in the right place, the right size store — I think stores could be smaller now than was designed years ago,” he said.

Berliner said the pandemic has just accelerated a trend of store closures throughout the United States. That’s because, he said, the country has been “over-stored” for years.

COVID-19 Economy FAQs

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.

What’s going to happen to retailers, especially with the holiday shopping season approaching?

A report out recently from the accounting consultancy BDO USA said 29 big retailers filed for bankruptcy protection through August. And if bankruptcies continue at that pace, the number could rival the bankruptcies of 2010, after the Great Recession. For retailers, the last three months of this year will be even more critical than usual for their survival as they look for some hope around the holidays.

Read More

Collapse

As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.

Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.

Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.