“As we continue to practice social distancing…” is a phrase many of us have begun to hear far too often.
As COVID-19 continues to grip the world in chaos, we must continue to limit our human interaction. But this has created direct and disastrous consequences for the American consumer market.
Week after week, we hear of millions of Americans applying for unemployment benefits. While the public acknowledges this, few actually understand the reasons why so many Americans have chosen to apply.
Businesses are closing, and they are closing fast. In April, Fitch Ratings, a provider of credit ratings, commentary and research, downgraded the credit rating of a number of popular retailers.
The list includes corporate giants such as Macy’s and Kohl’s and high-end designers such as Capri Holdings, which owns Michael Kors, Versace and Jimmy Choo.
Recently, S&P Global moved Macy’s from the S&P 500 market to the S&P Smallcap 600 list. In simpler terms, that’s like being removed from an honors class and being placed in a standard class.
As if that’s not bad enough, these are just the credit downgrades. A number of companies have also filed for bankruptcy, citing the lack of traffic due to the virus. These companies include J. Crew, Gold’s Gym and True Religion.
On May 15, JCPenney, a landmark of the modern shopping complex, filed for bankruptcy.
Retail stores have been one victim, with another casualty of the virus being local venues.
Recently, Atlanta’s own The Masquerade concert hall sent out an email stating that they joined the National Independent Venue Association and asked music fans to contact their congresspeople. Why? These venues need money since tours will remain canceled for likely the rest of the year. These venues are now revenue-less.
Many people were already struggling before this happened, and now, they are fighting to survive.
That’s the sad reality many small businesses are facing. Even with a federal grant or loan, many will not reopen when this is all over. Come next year, we will likely see many businesses disappear forever.
It would be devastating to see our favorite concert venues closed for good or retail stores sitting empty in complexes. But traditional American retail was already on its last legs, and this virus has only exposed the harsh reality of its weaknesses.
People weren’t going out to shop anymore long before the threat of a virus. Why would they? Why waste time, money and gas going all the way to the mall to buy one hoodie? With Amazon Prime and two-day shipping, you could stay home and mass purchase anything you need and more from the comfort of your bed.
It’s 2020, and the idea of “brick and mortar” is old. This may be the best time for companies to start crafting restructuring plans.
As companies realize that foot traffic won’t last forever, online services will begin to explode. Go out to the stores while you can; they probably won’t last into 2021.
While you shop, please remain six feet apart and wear a mask. Don’t wear gloves because that causes cross-contamination, just wash your hands and use hand sanitizer.
To consumers and businesses alike: stay safe.