By
with contributions from Rosemary Feitelberg
 on March 16, 2020
American Dream, the 3 million-square-foot entertainment and shopping center unveiled its Nickelodeon Universe during a preview for friends and family

Nordstrom late Monday said it was closing all its stores nationwide, effective Tuesday, for two weeks, joining Saks Fifth Avenue, which decided to close its Manhattan flagship for up to two weeks amid the climate of increasing coronavirus anxiety and uncertainty throughout the industry.

The two retailers become the first major department stores to temporarily close as a measure to protect associates and shoppers from covid-19, though on Monday several more retailers and brands unveiled temporary store closings and reduced hours as they watched business and the stock markets plummet, and noticed little if any relief from e-commerce.

Nordstrom said the temporary closures include all of its full-line department stores, Nordstrom Rack, Trunk Club clubhouses and Jeffrey in the U.S. and Canada for two weeks, effective March 17. “We’re taking decisive actions across the business to help protect employees, customers and others in the communities we serve,” said Erik Nordstrom, chief executive officer of Nordstrom Inc. “The health and safety of our customers and employees remain our top priority as we continue to make decisions during this rapidly evolving situation.”

Saks also has temporarily closed its Bela Cynwyd location in the Philadelphia area, in response to the governor’s recommendations to businesses in Pennsylvania. Saks said in a statement that it was “working to make thoughtful decisions that are right for our associates, customers and business in each of our markets” and that the “complexities” of operating in New York City contributed to the decision to close the flagship.

Both Nordstrom and Saks will pay all associates for their scheduled hours, the companies said. “During this unprecedented period of uncertainty, we have in place the appropriate business continuity plans, operational framework and team,” said Nordstrom. “This, in concert with ending 2019 with a solid financial position and healthy balance sheet, gives us the ability to weather this challenging moment in time.”

Some retailers and brands are questioning why malls remain open amid the coronavirus pandemic, though certain centers are curtailing operating hours.

Despite government and health officials advocating social distancing, “The big malls don’t want to start closing because they would have to give retailers some rent release,” said one fashion industry executive, who requested anonymity. “There’s no question. It comes down to the rents.”

“There could be a penalty for closing when the mall is still open, or if you don’t keep to their hours,” said a senior executive at a specialty retailer.

“We’re moving forward with reduced store hours — consistent with many of our competitors and the mall operators,” said Express chief executive officer Tim Baxter. “Our objective obviously is to provide safe environments for both associates and customers so we are following CDC suggestions.”

American Dream, the 3.3 million-square-foot entertainment and retail center in East Rutherford. N.J., closed on Monday and anticipates staying closed until the end of March. A grand opening of its Dreamworks Water Park and the launch of many retailers at the center, marking the first phase of store openings there, was scheduled for Thursday but has been postponed. The owners said there were no reported cases of COVID-19 at the center.

Officials at Simon Property Group were contacted Monday afternoon regarding any mall closings and how the virus-related retail closings would be treated, but there was no response as of press time.

J.C. Penney has temporarily reduced store hours to help prevent the spread of the virus and protect associates and customers. Starting Tuesday, stores will be open from noon to 7 p.m., Monday through Saturday, and 11 a.m. to 6 p.m. on Sunday.

“Our focus remains on the safety and well-being of our associates and customers,” said Jill Soltau, chief executive officer of J.C. Penney. “With the effects of the coronavirus ) outbreak being felt more each day, we want to do everything we can to prevent the spread of this virus and keep our associates, customers and communities safe.”

In addition, Penney’s has temporarily closed its six stores in Puerto Rico until March 30 to adhere to a governor-mandated measure that required non-essential retailers — excluding grocery stores, pharmacies, banks and gas stations — to close.

“Our own direct business is off and I’m not the only one,” said Deirdre Quinn, cofounder and ceo of Lafayette 148. “The stock market has spooked a lot of people and I am sure people are worried about their jobs and life in general…It’s only a matter of time before the cancellations begin,” Quinn said, referring to orders from retailers. “We still have a collection to work on, for resort, for the June market. It will be a reduced collection.”

Quinn said Lafayette 148 workers could stay home if they wanted and that about 10 percent, or 25 people, of the workforce has been coming to work at the brand’s headquarters in the Brooklyn Navy Yard. “They’re taking turns. Some come in one day, some another day…Our warehouse [which is also in Brooklyn] is down 50 percent but still open. Luckily, our factory is running in China. That means there is a light at the end of this.”

J. Crew also decided to close its stores, with ceo Jan Singer indicating Monday that all J. Crew and J. Crew Factory stores will be closed until March 28. “You can continue to find us at jcrew.com and jcrewfactory.com and on our social channels to help with anything you need,” she noted in an e-mail. Madewell stores are also closed until March 28 and continues to operate online. Vineyard Vines closed all of its 109 stores, while PVH Corp. closed all its more than 1,000 stores in North America and Europe, including those under the Tommy Hilfiger, Calvin Klein, Van Heusen, Izod and Speedo banners.

“Store traffic is down tremendously, but it’s across the board, not just with us,” said one vertical retailer who requested anonymity. “We did see e-commerce fall off big as well. We are hoping that the longer people stay home and spend time on their computers, they will return to shopping online. We want to be sensitive to this situation and will wait about a week before we start encouraging people at home to go online. We will figure out new ways to engage. We could videotape new receipts, offer alternatives to receive or return packages, or extended return policies. Chances are they won’t need expedited shipping since they’re not going anywhere. I believe we’ll begin to see a ton of promotion online but we will stay clear of that. For us, it’s more about offering the service and enticing customers with rewards.”

“We’ll bolster our online presence — across our site, social media and our Women Together events — to offer women more experiences to connect with each other, our values, and product,” said a spokeswoman for Eileen Fisher, which has also temporarily closed its stores. “We will strive more deeply to bring simplicity and versatility to wardrobes and life.“

Fisher is said to be reflecting on what the crisis is calling on the company to do differently. “The planet is telling us to stop and slow down. To be more vigilant in what we produce. Simplify what we are doing. The choices we make need to be much more important and meaningful,” the spokeswoman said.

The fashion industry executive who requested anonymity told WWD, “Our business was really good but in the last eight days it got worse as the market crashed, even online has softened dramatically.” The executive said spring fashion goods have mostly been delivered to stores yet there are concerns about cancelling summer and fall goods and retailers asking vendors to take back goods and replace them with fresher goods. “Those conversations haven’t started yet,” said the executive.

Analysts saw some silver lining. “I don’t want to sound bullish because there is no reason to be but I have been seeing some migration to online in the teen sector up until this past weekend. Is it enough to compensate for the loss of store traffic? My answer is no,” Janet Kloppenburg, president of JJK Research Associates, said Monday. She cited Hollister, Zumiez, Aerie and Tillys, as well as  Bath & Body Works, as among the retailers likely holding up and seeing some shift to digital with kids out of school and stores closing. “Some teen retailers probably fared better than women’s, children’s and footwear retailers,” Kloppenburg added. “But today [Monday] would be a lot different than last week. There is a greater sense of worry and uncertainty out there than a few days ago, particularly as more brands have announced the closing of their global brick and mortar fleet.”

Craig Johnson, president of Customer Growth Partners, estimated online sales have jumped from representing 16 percent of total retail sales across the U.S., to  21 percent  in the last 10 to 12 days, though any online uptick wouldn’t be enough to make up for lost sales in stores. He said Feb. 26, Ash Wednesday, was an inflection point when people starting buying up face masks, Purell, toilet paper, paper towels, canned goods and pastas. “It really steepened about a week or 10 days ago.”

The traffic  in shopping centers is the worst since 9-11, Johnson said. “Things were in a total ditch that year until the World Series.”

The steep decline in mall sales has been offset somewhat by online sales and business at big-box retailers like Walmart Inc., Target Corp., Costco and Dollar General. “Those guys are up double digits. Total U.S. sales are down, but it could have been worse. At those big-box stores, there’s been a “demand pull forward” on sales, which doesn’t last, Johnson said.

Another positive — Costco and Sam’s Club are getting lots of new members. “That will be a lasting legacy of the membership buying,” Johnson said, adding that when the coronavirus subsides, consumers will show resilience. “America has always bounced back,” he said optimistically.

Less optimistically, Coresight Research warned that there could be more than 15,000 store closures of the permanent kind announced by retailers this year due to the pandemic and the existing pressure in the sector.

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