A recent survey by a team of academic economists found that two-thirds of small-business owners said they could carry on if the crisis lasted a month, but only a third said they would survive if the disruption dragged on for four months.
“There’s no question that if it goes on for four to six months, it will be catastrophic,” said Edward Glaeser, a Harvard economist who was one of the study’s authors. “For many businesses, almost assuredly the answer will be closure.”
The steep sales drop underscores the huge role that physical stores continue to play within retailing. Even as online businesses at major apparel chains and department stores have gained ground in recent years, they can’t make up for the shuttering of malls and stores.
“We’re going to come out of this having accelerated some of the trends that were already in place,” Ms. Zentner of Morgan Stanley said. “Internet taking share from brick and mortar, that’s going to be accelerated.”
Some chains have recently rolled out contact-free curbside pickup for products. But in the long run, retailers want customers to walk around stores and talk with staff members so that shoppers take “a second bite of the apple” as they browse, said Craig Johnson, president of Customer Growth Partners, a retail consulting firm.
In a sign of the industry’s upheaval, J.C. Penney, which has more than 800 stores, did not make a $12 million interest payment due Wednesday and has 30 days before it is considered in default. A company representative said it was a “strategic decision” to forgo the payment after discussions with lenders since last year to strengthen the chain’s financial position. That has become more important with the closing of its stores, the representative said.
For many of the nation’s nearly 16 million retail workers, the standstill has meant a loss of their livelihood, often overnight.
Article source: https://www.nytimes.com/2020/04/15/business/economy/coronavirus-retail-sales.html
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