It will end. But when, and what will the damage be when it does?
Those are the questions retailers are wresting with as they watch their in-store traffic disappear (unless they are selling groceries, water, toilet paper and other essentials) and even their online sales wither as consumers fixate on the coronavirus crisis. While many retailers began closing stores temporarily, others were rushing to reassure shoppers that their stores are safe, stressing extra cleaning is taking place. Business for many was already iffy, and the virus has only amped up the pressure — virtually eliminating any thought of a decent spring selling season and raising concern over whether sales will rebound even come fall.
Among the closings so far, all Nike stores around the world, except in South Korea, Japan and most of China, from March 16 to 27; Abercrombie & Fitch and Hollister in North America from Sunday through March 28, and in Europe, the Middle East and Asia, from Monday to March 28; Apple around the world except in the Greater China area until March 27, and Urban Outfitters closed all of its stores until at least March 28. Patagonia, Glossier, Allbirds, Reformation, Buck Mason and Vuori Clothing also closed their stores.
Those are just U.S.-based retailers. France and Spain over the weekend joined Italy in forcing all but nonessential businesses to close — which includes all fashion retailers, as well as bars and restaurants. So if luxury hadn’t already been hit hard by the virus as it spread throughout China, hopes of picking up some of that lost business with European consumers have been pretty much dashed.
Meanwhile, Walmart cut its hours at its 24-hour locations (roughly 2,200 of its 4,700 stores) to 6 a.m. to 11 p.m. until further notice, to give employees time to stock products and clean and sanitize stores as it copes with crowds of panicky shoppers stocking up on essentials just in case. Tapestry Inc. — parent to the Coach, Kate Spade and Stuart Weitzman brands — also scaled back their store opening hours, while Lululemon did the same for all of its stores.
“We are definitely seeing that traffic is down. We were hoping for a transfer of business online, but we have not seen that,” said Jim von Maur, president of Von Maur, the department store chain based in Davenport, Iowa. “I’m hoping by mid April this would be like a bad dream, but you don’t know.”
He also said the company is examining capital costs or investments that could be put off in case the COVID-19 situation persists for a long time.
Von Maur associates are being told to avoid any contact when presenting shoppers with clothes in fitting room areas and, with makeovers, to ask customers to apply the beauty products themselves. “Our stores have always been spotless,” von Maur said. “We are always cleaning but we have been adding extra cleanings.”
Lori Friedman, owner of Great Stuff, a contemporary apparel retailer with stores in Scarsdale, Rye and Chappaqua, N.Y., and Westport and Greenwich, Conn., said business hasn’t been good at all. “Nobody wants to come out,” said Friedman. “Those that do, we’ll keep the doors open so they don’t have to touch the handle, and we’re calling people to see if they need clothes.…They’re not leaving their houses except to buy food. They don’t want to shop online.”
Gap Inc. said Thursday that it expects to lose $100 million in business in the first quarter of this year alone, mostly from China stores, and that it could not forecast the effect of the virus beyond the first three months due to the rapidly evolving nature of the crisis.
On Friday, industry experts indicated that those retailers that offer effective alternatives to in-store shopping, like revving up online services, online incentives, speedier deliveries and curbside pickups, have the best chance of reducing the coronavirus impact the most. Inside stores, retailers should make it apparent to shoppers that workers are frequently wiping down displays, fixtures, checkout areas, bathrooms, seating areas and doors, and providing sanitizers, to demonstrate their concern. Walmart, Ulta, Target and Nordstrom, among other retailers, have curbside pickups in many locations, and many more retailers enable shoppers to order online and pick up their packages inside the stores.
Retailers should also communicate regularly to customers and employees the measures they’re taking to reduce risks of getting infected by the virus. “When you are in a volatile environment you can’t over-communicate,” said Kathy Sheehan, senior vice president of Cassandra, a firm of “cultural strategists and business intelligence experts.” During a conference call Friday with Cowen & Co. on the coronavirus and influencers, Sheehan said, “Staying close to customers, being reassuring to whatever extent you can, is a really important strategy.”
Still, retailers were trying to remain upbeat.
“We will get through this,” stated Jeff Gennette, chairman and chief executive officer of Macy’s Inc., in an encouraging letter to employees Thursday night as news of the spread of the coronavirus continued to dominate the media, and sports events, shows, conferences, festivals and public gatherings were being canceled nationwide.
But Gennette underscored “the degree of uncertainty that we are all working in…We are worried about the impact on our family and friends. We see the stress on the business. We read the headlines. But while this is one of the most unsettling situations we have been in, I have confidence in our resiliency and our ability to adapt. Every day, I see our teams problem-solving with focus and urgency. I see us responding to each new challenge with well-executed solutions. I see colleagues supporting one another.”
Gennette said the company formed a cross-functional team to follow global and local developments. “This allows us to respond quickly and effectively to individual, team and facility impacts. In addition to following the Centers for Disease Control’s guidance, we are also working closely with local and state officials and health departments. We have stores, distribution facilities and offices nationwide, and know that many of our communities have already been impacted,” Gennette said.
Among the other measures Macy’s is taking, Gennette pointed to increased cleaning in facilities, stores and offices. That includes more frequent cleaning of heavily trafficked areas and hard surfaces including entrances, customer service stations, checkout stands, escalators and elevators, restrooms and colleague break rooms, as well as the corporate offices and facilities.
“We have a rapid-response deep-cleaning plan in the event that a store, office or facility is exposed to COVID-19.” Macy’s also has a COVID-19 emergency leave and pay policy. “Any colleague who is confirmed to be infected with COVID-19 or who is required by the government or Macy’s to self-quarantine will receive compensation during that two-week period,” he said in the statement.
Gennette said the company has a web page with “all of the resources you’ll need, including FAQs and important contact information.”
Target is cleaning surfaces like check lanes and touchscreens at least every 30 minutes, adding payroll hours for the stepped up cleaning, temporarily stopped food sampling in the stores, limiting purchases of certain products in very high demand, and added staff to service drive up pickups and in-store pickups of online orders.
“Our retail leaders stand at the ready to react and respond to help ensure the security and safety of employees and consumers alike in the communities they serve,” said Matt Shay, president and ceo of the National Retail Federation. “Retail brands are always on the frontline with citizens in communities large and small, and they are partnering with the health care industry and government officials to ensure COVID-19 is contained and mitigated as quickly as possible.”
Lou Amendola, chief merchandising officer of Brooks Brothers, said even before the virus hit the U.S., business had been challenging since Brooks Brothers has 90 points of sale in China and about 20 in Italy. But on a positive note, Amendola said that most of the stores in China have reopened and business is slowly starting to recover there.
“Every day, we’re seeing an uptick in the reopening of stores and movement, which shows that it doesn’t last forever,” he said. “But as the business comes back, it’s not at full throttle, it’s a slow build.”
The drop in sales and delays in shipments will definitely impact business going forward, he acknowledged. “It’s a little early to predict spring sales,” he said.
With deliveries for subsequent seasons being delayed, there is a slight silver lining. “We won’t be bringing in winter coats in June, so it might help to bring the product to the consumer when they need to shop.” Amendola said Brooks Brothers has been sending e-mails telling customers that stores remain open and are being cleaned regularly. The company is also encouraging online shopping and offering free shipping and free returns.
While major U.S. retailers for now at least are staying opening, France will close all nonessential stores to try to contain the rapid spread of the coronavirus. The order from Prime Minister Edouard Philippe announced Saturday applies to restaurants, cafés, movie theaters and nightclubs. Grocery stores, pharmacies, gas stations and public transportation will remain open.
In the U.S., retailers have been informing customers of the measures they’re taking to reduce the risks of infection. The presidents of Hudson’s Bay Co.’s Saks Fifth Avenue, Saks Off 5th and Hudson’s Bay divisions e-mailed letters to customers informing them that their stores are open for business and getting frequently cleaned, and employees are being encouraged to frequently wash their hands and go home if they feel sick.
In his e-mail, Hudson’s Bay president Iain Nairn wrote that the Canadian chain is “actively following the guidelines established by Health Canada and other global health authorities. Through our regular course of business, our stores are cleaned daily and we have taken additional steps to increase the frequency of disinfecting high-tough areas throughout our stores. Additionally, we are working to ensure all of our associates are well-informed and taking necessary precautions. Our beauty associates are following specific guidelines related to the hygiene of makeup testers and for makeup applications. We are encouraging associates to take care of themselves including clear protocols for frequent hand washing and other proper hygiene practices as well as defined direction on staying home if they feel ill.…Our stores are open and continue to be a safe place for you to shop.”
Neiman Marcus Group ceo Geoffroy van Raemdonck told customers that stores have enhanced their cleaning standards, “adding precautions focused on disinfecting and sanitizing all frequently touched surfaces,” which include counters, elevator buttons, door handles, light switches, restroom areas and escalators. We’ll continue to keep hand-sanitizing dispensers prominently displayed for your use. Additionally, we’ve put a temporary hold on high-touch services such as personalized makeup tutorials and product testing, and have postponed our in-store events through the end of April.” Van Raemdonck also said associates have been provided associates with procedures provided by the CDC and World Health Organization to protect against the virus.
Deirdre Quinn, ceo of Lafayette 148, said her number-one priority is safeguarding the health of her employees. The company has a temperature check at its Brooklyn headquarters, which isn’t mandatory. At the brand’s nine stores around the country, “traffic has definitely decreased…We went from an awesome February to a bummer,” she said. “If a customer wants us to bring clothes to her, we will go above and beyond,” she said, including doing a video appointment.
At Lafayette 148’s owned factory in China, things are returning to normal. “We’re at 50 percent of plan, last month it was zero. Our factories are at 95 percent capacity for our manufacturing.” But the mills are closed in Italy, where the brand buys fabrics and accessories. She said if it lasts for only a couple of weeks, it will be OK. “We have sewers but not fabric,” she said.
Lester’s, which caters to children and teens with stores in New York City, Rye Brook and Greenvale, N.Y., sent out e-mails offering FaceTime appointments for parents to buy layettes and clothing and necessities for sleep-away camp.
Emily Holt, owner of the Hero Shop in San Francisco, said e-commerce and home delivery are being prioritized. Clients can e-mail Holt for “care packages” of spring looks which will be delivered by messenger if the address is local, or by FedEx if it’s not local. The charge for the box is $25, which covers shipping and labor, and clients can keep or return items.
RTH Shop, a designer clothing store in West Hollywood, Calif., was open Friday by appointment only. “Doing so will allow us to manage the number of folks in the shop at one time plus it gives us some real one-on-one opportunities with each of you to effectively clean/disinfect and prepare for our next appointment,” said René Holguin, owner, in an e-mail.
Westfield Century City mall in Los Angeles said in an email that cleaning is more frequent and intense, particularly in high-touch areas including restrooms, play areas, dining areas and water fountains. The center is also deploying a public service campaign to enforce preventative measures to help limit the spread of COVID-19.
According to Oliver Chen of Cowen & Co., “We believe retail and customer preferences will rapidly evolve as ‘social distancing’ becomes common to slow infections. Retailers with curbside and digital delivery will gain share as shopper loyalty, engagement, and lifetime value grows.”
Cowen’s top “social distancing” retail picks include Walmart, Target, Ulta and Nordstrom. According to Cowen, Walmart has expanded grocery curbside pickup to over 3,100 locations, and plans to add another 500 stores this year. “We also like Walmart’s online grocery delivery options, next-day delivery on several hundred thousand of the top items sold, and free two-day shipping on orders above $35. WMT’s physical fleet is incredibly proliferated across the U.S. with a store within 10 miles of 90 percent of the population. Additionally, Walmart has one of the most sophisticated e-comm platform.…Walmart is a grocery leader with 56 percent of its mix in groceries, and continues to gain market share, which we expect to only further accelerate as the retailer benefits from shoppers stocking up.
“Target is also positioned to execute as social distancing becomes a more common practice. This will be done through various same-day fulfillment options, including Drive Up, which Target has quickly scaled to 1,750 plus locations and will add to its smaller format stores.…Target is also set up well to take share given its well-diversified portfolio.”
“I do feel that Wednesday evening was a definite pivot point,” Sheehan said, commenting on people’s reactions to the crisis. She cited Tom Hanks announcing that he and his wife Rita Wilson had the virus, as well as Disneyland and many other businesses and destinations announcing suspensions of business. She said Cassandra surveyed people ages 14 to 30 on March 9 and 10, and many seemed most concerned about the degree of risk of getting infected at the gym, and whether to cancel travel plans.
Also, “There was quite a bit of concern about elder relatives and elderly people in their community.…Gen Z consumers wanting to really feel knowledgeable, going straight to the CDC web site for information. There is a lot of concern about whom to trust and reputable sources.”