Some on-site chain stores may not reopen after pandemic subsides

Stores may seem empty now in the age of self-isolation amid the coronavirus pandemic, but there will be fewer stores to browse when shoppers can venture out en masse again.

Forty-three retailers had declared bankruptcy this year as of July 23, according to S&P Global Market Intelligence. That list includes J.C. Penney, GNC, Tailored Brands (which owns apparel chains Jos. A. Bank and Men’s Wearhouse), Ascena Retail Group (which owns Ann Taylor and Lane Bryant apparel chains), Sur La Table, Neiman Marcus and others.

Declaring bankruptcy doesn’t necessarily mean the brands will be gone for good, but the retailers have all announced plans to shutter stores. And that means the local and national landscape for stores will change.

J.C. Penney, a 118-year-old company, plans to close about 150 of its 850 stores as part of its reorganization. In the Pittsburgh region, the closures include department stores at Clearview Mall in Butler, at the Galleria at Pittsburgh Mills in Frazer and at the crumbling Century III Mall in West Mifflin — where the chain was the sole remaining store open at the nowdead mall.

The Jos. A. Bank men’s clothing store, a longtime fixture in the Golden Triangle, closed this month, along with locations in the Mall at Robinson and in Monroeville. The apparel brand’s parent company, Tailored Brands, said it would be closing up to 500 stores over time.

“Unfortunately, due to the COVID-19 pandemic and its significant impact on our business, further actions are needed to help us strengthen our financial position so we can navigate our current realities,” said Dinesh Lathi, Tailored Brands president and

CEO.

Pittsburgh-based health and wellness retailer GNC alone plans to close 800 to 1,200 stores as it tries to find a buyer.

And Simon Property Group, which operates Ross Park Mall, South Hills Village and Grove City Premium Outlets, is reportedly in talks with online retailer Amazon about possibly setting up fulfillment centers in vacant spaces at its malls across the country, according to the Wall Street Journal.

While the retail sector’s woes have been well publicized for years — competition from online shopping and changing consumer spending priorities have been factors — the pandemic has dealt a massive body blow. Not only have public health measures meant that many stores have had to temporarily close or limit hours, but shoppers are still being cautious with their wallets.

The number of laid-off U.S. workers applying for unemployment aid for the first time was 963,000, according to Labor Department figures released Aug. 13. It’s the first time the number of applicants fell below 1 million since the pandemic intensified five months ago. Last week’s tally still exceeds the pre-pandemic record of just under 700,000.

In addition to people who applied last week for state benefits, nearly 489,000 others sought jobless aid under a new program that has made self-employed and gig workers eligible for the first time, according to the Aug. 13 figures.

Retail sales have climbed in recent months, according to the U.S. Census Bureau, which reported Friday that overall sales during July were up 1.2%, seasonally adjusted, from June. Meanwhile, the $600 a week in unemployment assistance that helped bolster spending expired at the end of July.

“Retail sales grew modestly in July as shoppers faced concerns over the continued surge of COVID-19 cases in many states and uncertainty about the extension of enhanced unemployment benefits,” said Jaime Ward, head of retail finance at Citizens Bank. “Back-toschool shopping may be taking a hit now as many school districts consider delayed openings or a continuation of virtual classes in the fall.

“Again, we see that retailers that have invested in their e-commerce platforms are faring better than those who rely on bricks-and-mortar stores. Some retailers are facing tough choices as the impact of the pandemic drags on in the United States.”

It’s not just companies seeking bankruptcy protection that are shrinking their brick-and-mortar fleets. Bloomberg analysts expect more physical stores to go dark as an increasing number of people turn to digital outlets in 2020.

“Many retailers can still reduce their physical footprint by as much as 50%,” Bloomberg analysts wrote in a July 15 note.

“Amid corona virus driven store closings — as long as three months in some cases — we expect many retailers won’t reopen a portion of locations as they seek to exit leases. Gap and L Brands are actively reducing their store fleet …”

Retailers that can juice up their online presence have been doing so, and shoppers who may not have previously turned to digital venues to shop for particular items are starting to look for ways to limit their time in physical stores and their potential risk of exposure to the novel coronavirus.

“E-commerce has accelerated, and even products they may not have bought online before they seem to have been pretty happy with the experience,” said Mickey Chadha, an analyst for Moody’s Investors Services.

But Mr. Chadha notes that pivoting to online shopping isn’t a magic wand for retailers.

“The underlying issue is e-commerce isn’t going to be enough to offset brick-andmortar sales losses,” he said. “The sales mix has changed at stores. Traffic is low as people consolidate their trips, and people aren’t buying the higher margin products they normally would.

“At Target, for instance, they were looking to buy essentials. They’re not lingering in the store. The same with Walgreens. People are going in to pick up consumables that are lower margin, not beauty products or passport photos.”

Consumer spending represents a huge part of the U.S. economy — about 70% of American economic activity. Consumer spending collapsed at a 34.6% annual rate in the past quarter as people stayed home and as shutdown orders forced many restaurants, bars, entertainment venues and other retail establishments to close.

Mr. Chadha notes that with COVID-19 infection rates climbing in certain areas, spending will continue to be weak.

“We are in a recession. Unemployment is still high. With stimulus programs waning, whether or not they are extended remains to be seen,” he said. “We still expect a gradual recovery, but the rise in infections in population centers is obviously a concern, which might slow or reverse improvement in labor markets.”

On Wednesday, Stein Mart, which has a store in Ross, joined the ranks of retailers filing for bankruptcy.

The company expects to close “a significant portion, if not all, of its brick-andmortar stores,” according to a statement.

Stein Mart said it is evaluating all options and may sell its e-commerce operations and related intellectual property.