09/17/2020

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The Retail Industry Looks Ahead



Retail Sales Fall More than Expected


Retail sales tumbled by 16.4% in April. This was a larger decline than the 12.3% estimate that economists predicted. Nearly 70% of the country’s $21.5 trillion economy relies on consumer spending, and these historically low numbers have some analysts worried. According to recent statistics, clothing and accessory sellers took the hardest hit, followed by electronics and appliances, home furnishings, and sporting goods. Grocery stores were the only sector of the retail industry that saw a rise in sales.

Some retailers are trying to make up for these losses by reopening as quickly as possible while keeping customers and workers healthy. Simon Property Group (SPG), which operates malls and other retail spaces, for example, has opened 77 of its 209 properties as of last week. The US’ largest mall operator is moving forward with its reopening plans this week, and although it’s been a slow, hesitant process, investors are eyeing every move to get a sense of what’s in store for the rest of the retail industry.

Looking at Retail Reopenings Overseas


As retail spaces in the US gradually reopen, Wall Street is looking for clues based on what’s happening in other countries around the world. This includes precautionary steps and foot traffic.

Like many shopping centers across the globe, Dubai Mall, the world’s largest mall, closed its doors on March 25 to curb the spread of coronavirus. Dubai Mall gradually reopened on April 28, but the shopping experience is significantly different than it was before the pandemic. The mall used to welcome 80 million visitors each year, but now it is operating at 30% capacity to allow for social distancing. Thermal scanners have been installed at every entrance and shoppers and staff are required to wear masks. Some American malls may implement similar measures to keep visitors safe.

In China, although lockdowns have been lifted, malls aren’t seeing the same traffic they used to. Consumers appear to be hesitant to return for a multitude of factors. First and foremost, concerns about contracting the virus remain. Furthermore, others are watching their wallets as some people have lost their jobs or are simply being more cognizant about their finances. China’s story illustrates the fact that just because malls are reopening, it doesn’t automatically mean there will be an immediate return to normal.

TV Retailers May Be Sidestepping the Storm


In a slightly unexpected bit of good news for the retail industry, TV retailers such as QVC and HSN have seen sales increase by 10% between the end of March and the end of April. Online shopping via sites like Amazon (AMZN) are up, but people are also buying products based on what they see on TV.

As people shelter in place in front of their TVs and phones, TV shopping companies have seen viewership rise by 100%. The future of retail is uncertain in many respects, but business models like QVC and HSN have illuminated different ways to entertain shoppers even during a global pandemic.


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