Given the global pandemic’s fluid severity depending on U.S. state and country, it’s hard to measure the virus’ eventual aggregate negative impact on trade until it runs its course. In the U.S., according to the Trump Administration, that could be July or August. But at this point, it’s safe to say every aspect of the business world will be obstructed severely, from Wall Street to Main Street, through the first half of 2020. Some Wall Street circles are already forecasting negative 5-10 percent GDP for the U.S. in the second quarter.
Under that scenario, the important Back-to-School seasons for shoe brands and retailers could be salvaged — if global shipments out of Asia aren’t snarled for an extended period due to coronavirus-related supply chain interruptions or capacity shortages on the sea. An estimated 44 percent of retailers expect product delivery delays due to the coronavirus and 40 percent are forecasting inventory shortages, according to a recent Digital Commerce 360 survey.
Even without delays or new product shortages, vendor and retailers will likely be faced with moving excess inventory bought for the first and second quarters but never sold due to virus-related issues, among them, mall and store closures, pro and local sports league cancellations and self-quarantined Americans.
With the U.S. government proposing to dispatch checks to affected workers, including those in restaurant and the airline industries, most of the early numbers on COVID-19’s impact and the weeks before it hit U.S. soil are downright frightening. Consumer confidence fell for the first time in seven months, down 7.1 percent in an early March reading by Prosper Insights and Analytics. With February retail sales down 0.5 percent from the prior month but up 4.2 percent from Feb. 2019, Coresight Research predicted there could be 15,000 more permanent store closures this year caused by existing pressures in the retail sector and the ongoing pandemic. Meanwhile, investment analysts pegged Nike’s potential revenue decline from the coronavirus over the next 3-6 months at $5.5 billion. It’s estimated the U.S. could lose 1 million jobs in March alone.
In the early days of the pandemic, major U.S. retailers scrambled to fill supermarket shelves for hoarding and worried consumers as numerous brands from Apple and Nike to Patagonia and Under Armour moved swiftly to shutter their respective doors for at least two weeks. In announcing its North American store closures and in-house Canadian production facilities through at least March 31, Canada Goose said CEO & President Dani Reiss would forgo his salary for at least the next three months with the monies shifted to a newly-established employee support fund to aid GOOS workers.
Outdoor giant REI closed its 162 stores through an initial date of March 27. The co-op said it would pay employees through the temporary closure, and offered free shipping online during the closure.
“I believe that is the right thing for our community. In fact, I believe it is our duty—to do all we can to help keep one another safe in this unprecedented moment,” Eric Artz, President & CEO of REI Co-op, said in a statement.
Wolverine Worldwide-owned Merrell also closed its stores and announced that it would pay employees through the period.
DTLR said it would temporarily close its 240 locations nationwide and corporate office through March 31 but continue to pay team members throughout the two-week period. Dick’s Sporting Goods, like many other retailers, has trimmed its open store hours, but also expanded its curbside pick-up program for Dick’s and Golf Galaxy stores that will enable orders to be delivered vehicle-side.
Informal discussions with both Target and Walmart associates over the last week revealed a huge uptick in online orders and curbside pick-up. It’s clear that BOPIS (Buy Online, Pick-Up In Store), or curbside in this case is likely to get a huge lift from the coronavirus pandemic. How both small and large retailers market its availability once the health crisis clears bears watching. As does, how sports, shoe and running shops reach out and embrace their long-quarantined customers to try on the latest running shoe or engage in their favorite fitness and sports activities again.