Retail Industry Grapples with Doing Business During COVID-19

May 20, 2020
Author: Mara Zemicael

Like other industries, the Retail Trade sector has acutely felt the impact of the COVID-19 pandemic. This is especially true for brick and mortar businesses, which rely on customers visiting a physical location and spending their disposable income. With multiple states phasing out their shelter-in-place orders, many retailers are evaluating their current situations and their ability to endure the economic downturn.

Fear of coronavirus has retailers looking for new ways to attract customers.

Except for grocery stores, most retail establishments were deemed nonessential, resulting in their closure in many states during March. As many retail stores prepare to open their doors again in May, business owners are grappling with how to overcome weeks with significant decreases in revenue and decisions about proper staffing and inventory needs, especially since they’re not sure when demand will return to pre-pandemic levels.

Steve Dennis, president and founder of SageBerry Consulting, a strategic consulting firm for the retail industry and the author of Remarkable Retail: How to Win & Keep Customers in the Age of Digital Disruption, views the long-term outlook for retail as remaining in limbo until an effective vaccine is readily available and adopted by most people. In the short term, retailers must convince both their staff and customers that their lives aren’t at risk venturing into a retail space.

The “baseline challenge for most physical stores is that many consumers are coming from a place of fear and asking themselves, ‘What is necessary?’” Dennis said. “Retailers have to create a safe environment or be perceived that way.” He added, “If you’re a clothing retailer, do you allow customers to try on clothes or go into a fitting room? Safety or the perception of it is the immediate priority. The huge challenge is the significant fixed cost for operating a store. If you can’t get close to your previous sales volume and with the costs of these prevention measures, the economics can be challenging.”

Related: Will Consumer Spending Return to Pre-Coronavirus Levels?

Consumer Fears Impact the Future of the Retail Trade Sector

These fiscal challenges are evident. In a matter of two months, the pandemic and the response of the federal and local governments has severely slowed the economy and dramatically increased U.S. unemployment. Although many in the U.S. from all walks of life understand the need to control this public health crisis, the prescribed social distancing measures and the fear of many consumers to venture into public places are barriers to retailers trying to jump-start their businesses to pre-pandemic revenue levels. Per the U.S. Bureau of Labor Statistics (BLS), the Retail Trade sector lost 2.1 million jobs in one month, causing the sector to fall from 15.6 million jobs in March to 13.5 million jobs in April.

Crawford Brock, owner and CEO of the Dallas luxury clothing and clothing accessories retail store Stanley Korshak, has survived prior economic downturns in his 33 years of operating the company. While he believes Stanley Korshak will make it through intact, he does see how the uniqueness of this financial crisis presents challenges to the retail industry. “No one knows what will happen,” he said. “Down the road, maybe a year from now, things will still be down, and it may be until 2022 before retailers can figure out what type of clothing lines to shift to.”

A recipient of a Paycheck Protection Program loan, Brock believes the COVID-19 pandemic has created hardships for many in the retail industry. Many retailers have had consecutive days with severely reduced incomes. Without having enough cash available or knowing when sales will increase, Brock expects retailers to have issues with staffing stores and a disruption of the retail supply chain that will affect designers and vendors.

The data backs him up. According to the U.S. Census Bureau, retail and food service sales in April were down 16.4% from March 2020 and 21.6% below April 2019. Clothing and clothing accessories stores were down 89.3% from April 2019, while non-store retailers were up 21.6% from last year. (Examples of non-store retailers include e-commerce, direct-response advertising, door-to-door sales and vending machines.)

Though the current reality may look bleak, industry experts expect retailers to make it through the COVID-19 financial crisis by adapting to trends in consumer behavior and technology and by becoming experts at meeting their customers’ needs. Some of these immediate changes may include setting one-on-one sales appointments with customers, transitioning away from formal wear to casual wear to reflect consumer behavior and investing in e-commerce.


Existing technology that bridges the gap between the in-person rapport between sales associate and customer and the convenience of online shopping can be a win-win for brick and mortar retailers – now and after the pandemic. Immerss, a platform that leverages shoppable live video technology, has found a way to extend the personal connection to the online shopping experience.

“Retailers and their customers are hungry for human-to-human interaction, but the truth be told, the video commerce tech is still very young and there are very few enterprise-level tools on the market,” said Arthur Veytsman, CEO of Immerss. “When Covid-19 shut down all the stores, we modified our app to enable sales associates to work from home and that became a lifesaver. Sales associates were enabled to continue selling and earning commissions, while customers experienced a brand-new level of service.”

Even with the Chapter 11 bankruptcy filings of large companies such as J. Crew, Neiman Marcus and J.C. Penney, some experts see a positive outcome for the Retail Trade sector. Dennis views the crisis as resulting in a course correction following an oversupply of U.S. retail. Retailers that can’t offer unique value based on price, product or customer experience will likely go out of business completely or be absorbed by another company.

“The pandemic may create a realignment of the retail industry that is more profitable and aligned with supply and demand,” Dennis said. “There are too many factors for retailers who don’t meet a need to stay in business.”

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