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COVID-19

Retail decline continues with bankruptcies and closures sped up by pandemic

Justin Ho Sep 29, 2020
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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
Heard on:
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
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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

What’s the outlook for vaccine supply?

Chief executives of America’s COVID-19 vaccine makers promised in congressional testimony to deliver the doses promised to the U.S. government by summer. The projections of confidence come after months of supply chain challenges and companies falling short of year-end projections for 2020. What changed? In part, drugmakers that normally compete are now actually helping one another. This has helped solve several supply chain issues, but not all of them.

How has the pandemic changed scientific research?

Over the past year, while some scientists turned their attention to COVID-19 and creating vaccines to fight it, most others had to pause their research — and re-imagine how to do it. Social distancing, limited lab capacity — “It’s less fun, I have to say. Like, for me the big part of the science is discussing the science with other people, getting excited about projects,” said Isabella Rauch, an immunologist at Oregon Health & Science University in Portland. Funding is also a big question for many.

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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