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US retail faces an uncertain future as nonessential stores close due to the coronavirus pandemic

Daniel Keyes   

US retail faces an uncertain future as nonessential stores close due to the coronavirus pandemic

US retail sales growth in February 2020 dropped 0.5% compared with January 2020, which saw sequential retail growth of 0.6%, per estimates from the US Census Bureau.

Locations US Consumers Will Avoid If The Coronavirus Outbreak Worsens In The US

And key categories like food services, drinking places, and general merchandise stores saw their sales decelerate sequentially too, as consumers may have started to limit spending because of the coronavirus, according to The Wall Street Journal.

As the pandemic continues, consumers avoid public spaces like stores and restaurants, and some government officials require businesses to close, the retail industry's performance could take a serious hit in the coming months.

With states and cities closing nonessential stores, many retailers may lose the ability to make in-store sales altogether. The governor of Pennsylvania has ordered that only life-sustaining businesses may continue physical operations, and officials in Los Angeles are requiring malls and nonessential retail businesses to close. More jurisdictions may issue similar orders in an effort to stem the spread of the virus, forcing many retailers to close down their businesses, causing them to lose sales.

Considering Pennsylvania is requiring retailers in categories like furniture, clothing, department stores, and more to cease physical operations, these closures could affect a huge number of merchants. Some retailers aren't even waiting to be forced to close, as Macy's, Nordstrom, and others have already moved to temporarily shut down their locations.

The National Retail Federation (NRF) has made requests of the federal government in an effort to help retailers weather the pandemic.

  • It's looking for consistent and, in some cases, expanded guidelines on what retailers can remain in operation. The NRF wrote a letter to President Trump requesting "national guidance" on what types of stores can operate, as the list can differ between jurisdictions. It also called out a few industries it thinks should be able to remain open that some jurisdictions have shut down, like pet stores, distribution centers, and highway rest areas. Nationwide rules on what retailers can operate could limit confusion from retailers and consumers and minimize lost sales. Also, keeping additional industries open may enable more firms to stay afloat.
  • The NRF also called for aid from the federal government, per Retail Dive. Its requests reportedly include government-backed loans, relief from taxes, help with rent, and more. Such measures could make it easier for retailers to handle a drop in sales and temporary closures, and may make it easier for the retail industry to rebound once the pandemic subsides.

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