be unable to pay their rents unless they arerenegotiated. It is still an open question asto how many of these retailers can survive.One telling stat comes from Trepp, whichreported in the middle of April thatunpaid retail CMBS loans jumped to about9% from 1.7% in March. Trepp noted thatif this percentage remains the same inMay, the dollar amount could surpass $10billion.
That said, a number of larger, moreestablished stores have enough cash onhand to wait out these uncertain times.One analysis by Cowen & Co. finds thatdepartment store chains have enoughliquidity to last about five to eight months.
Online sales will provide some measure of
relief—Cowen’s analysis predicts that
Macy’s, for example, could bring in $449
million in monthly online sales, while
Kohl’s would generate $346 million
Not surprisingly, since the beginning ofMarch e-commerce levels have surged,especially among grocery stores, as consumers wait out the novel coronavirus at home.Fortunately for retailers, this is hardly a newtrend. For years now, they have been building up omnichannel strategies to complywith consumers’ expectation that theyshould be able to shop, when, where andhow they please.
Conventional wisdom suggests e-com-
merce will be retail’s saving grace during
the coronavirus crisis, enabling stores to
limp along until the crisis ends. Much, of
course, depends on the trajectory of the
virus and how long people must hunker
down. One thing is clear, however: the
coronavirus will accelerate trends that have
already been underway for the retail sec-
tor—trends that have been both positive
For instance, last year US retailersrevealed 9,300 store closings, according toCoresight. It was a record year and up morethan 50% from the closings in 2018. Thistrend will surely continue in 2020 as retailers, especially those with only a brick-and-mortar presence, struggle with diminishedfoot traffic.
However, the coronavirus will not beresponsible for all of these closings. Even atthe start of the year, store closings for legacyretailers was a problem for the industry, saysJon Duke, VP of research for IDC RetailInsights.
Most of those closings didn’t take any-
one by surprise, he says. “It was a continua-
tion of the culling of older brands that did
not have any staying power in today’s econ-
omy. Pier One was an older brand that did
not resonate with the new consumers. Sears
is an older brand that hasn’t been able to
stay. They have not been able to survive the
flip from Boomers to Gen X, Gen Y and
But the coronavirus will introduce new
risk factors for the stores that do survive.
One danger is that the longer they stay
closed, the more likely it is that people will
change their shopping habits, according to
a research note by Jefferies analyst Randy
Konik. “The more stores are closed, the
more demand is curtailed during those
actual closures, but it also changes con-
sumption patterns more and more to inter-
net spend,” he wrote.
On the other hand, online sales strategies, to state the obvious, are booming