With the coronavirus spreading, estimates on the U.S. unemployment rate range from the teens up to 30 percent — and retail ranks are being decimated.
The National Retail Federation forecasts that just over two million retail jobs will be “imperiled” during March, April and May, and about four million jobs within 12 months.
But those are just retail workers. According to the NRF, the total U.S. workforce including those workers and others impacted by the shutting down of retail operations would be 6.1 million for March, April and May, and just over twice that amount for the 12-month period beginning in March of this year.
“The term we are using is imperiled. These are jobs that will be lost but may come back on stream over the course of the year if the government stimulus does its job and gets the retail industry and the consumer through this crisis,” said an NRF spokeswoman. “If the economy does not recover, or things get worse, these jobs will be permanently lost. They will not be rehired over the course of the year.”
According to Mark Mathews, vice president of research at the NRF, the retail trade organization develops its job estimates using economic modeling software from Implan.
The hotel industry is also getting clobbered as travel halts. Based on current occupancy estimates, the American Hotel & Lodging Association said four million workers, including those in the hotel industry and others working indirectly for hotels, such as those providing food, flowers, supplies and doing construction work, have been eliminated already or are on the verge of being lost in the next few weeks. In certain affected markets, including Seattle; San Francisco; Austin, Tex., and Boston, hotel occupancy rates are already down below 20 percent and individual hotels and major operators have shut down operations.
“The impact to our industry is already more severe than anything we’ve seen before, including September 11 and the Great Recession of 2008 combined,” stated Chip Rogers, AHLA president and chief executive officer.
At Pebblebrook Hotel Trust, which has 54 hotels and more than 8,000 employees around the country: “As of today, we have had to make the difficult decision to let go over 4,000 employees,” said Jon Bortz, chairman and ceo. “By the end of the month, we expect another 2,000 employees will also be let go, representing over three-quarters of our employees. We are looking at closing the doors at more than half of our properties. This is the reality we, and countless other owners and operators around the country, are facing in the wake of this public health situation.”
There is some light in the tunnel.
Walmart, Amazon and Target are hiring tens of thousands of workers to meet the demand for essentials like groceries and pharmaceuticals, and the demand for deliveries. In addition, there could be some transference of workers from brick-and-mortar jobs to ones related to dot-com, but not much. “There is only a certain extent to which you can do that,” said Matthews. “The issue is training. You can’t immediately turn a store worker to someone coding for your Internet platform, or a warehouse worker to a marketer. But you might be able to take people out of the store and place them in a warehouse to help deliver products.”
There are other signs of light, including reports out of China this week that retail foot traffic is picking back up, though it’s still a long way from where it was before the outbreak began late last year there.
In the U.S., there are indications of some pickup in traffic online since Friday, after a steep drop-off on March 13 when President Trump declared COVID-19 a national emergency. Brick-and-mortar traffic has been practically wiped out with the exception of Walmart, Target, Costco, pharmacies and groceries, those retailers selling essentials. Last week, sources operating apparel dot-com operations reported business being way down. But now some brands are noticing decent online activity in wellness, office supplies, board games, computer gear and loungewear and sweats with people sheltering in and working at home.
Listrak, a 20-year-old e-mail service provider based in Lancaster, Pa., pulled data from more than 850 of its approximately 1,000 U.S. retail and brand clients, covering March 13 to 20, and found that apparel sales online are down 15 percent, and housewares and hardware sales are flat. However, e-commerce spending overall was up more than 40 percent in that period, paced by toys, sporting goods and camping, up a collective 200 percent; industrial was up 150 percent, and firearms up 200 percent. Listrak’s sample is almost entirely middle-market retailers, not high-end or discount.
Listrak also found that retailers increased e-mail send by 10 percent.
“While we saw e-commerce sales for the apparel category dip year-over-year, starting right around March 13, we did see a positive trend start this weekend powered by innovative promotions such as 25 percent off at Seven For All Mankind, 30 percent off site-wide at John Varvatos and everyday low-price retailer Rainbow Shops giving a 10 percent off site-wide sale, which they don’t typically offer,” said Ross Kramer, ceo of Listrak. “Outdoor/ bicycle gear brand Pearl Izumi is hoping to see an uptick in sales from people not being able to go to the gym and [instead] riding their bikes outside while keeping a safe social distance.”
Kramer noted that Hanky Panky shifted marketing communications to focus on casualwear versus undergarments, with a tag line “The new work uniform” coupled with free shipping.
He said camping equipment would be up considering many people sought to escape dense cities for nature, though the category has cooled a bit in recent days.
Guns and ammo, he surmised, rose because “in certain parts of the country there are folks concerned about the government control over our behaviors. We have seen an increase in guns and ammo during certain political cycles.
“From what I can see in the data when the state of emergency was announced we immediately saw lower online sales in apparel, 15 percent really immediately. But the tide turned on Saturday, when apparel sales were 5 percent over 2019. We are seeing a greater increase of promotions, which could feed into negatives turning positives.…On Thursday, Friday when people started realizing the world they are living in, many retailers and brands started offering 25 percent off, site-wide.”