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Coronavirus is Amazon’s Cleanup Crew

May 18, 2020 By Young Research

By Aris Suwanmalee @ Shutterstock.com

After Amazon set about decimating retail competitors across America, coronavirus has come along and helped it finish the job. Suzanne Kapner and Sarah Nassauer report in The Wall Street Journal:

Amazon. AMZN 0.68% com hurt many retailers. Coronavirus will finish some of them off.

Even as malls and stores begin to reopen, the Covid-19 pandemic has taken a toll on an industry already battered by the shift to online shopping. More than two million retail jobs disappeared in April as many stores closed. The damage will be clear Friday when the U.S. government reports what is expected to be one of the worst months for retailers since World War II.

Roughly 100,000 stores are expected to close over the next five years—more than triple the number that shut during the previous recession—as e-commerce jumps to a quarter of U.S. retail sales from 15% last year, UBS estimates. The turbocharged shift to e-commerce is expected to further depress profit margins and accelerate a shakeout in a country that already had too much bricks-and-mortar space for an increasingly digital world.

Just this month, luxury retailer Neiman Marcus Group Inc., apparel seller J.Crew Group Inc. and Stage Stores Inc., an operator of rural department stores, have filed for bankruptcy protection. J.C. Penney Co. is teetering on the edge after missing two interest payments. Collectively, they operated roughly 2,500 stores last year and employed nearly 120,000 people.

“If this isn’t the retail apocalypse I don’t know what would be,” said Sarah Wyeth, the lead analyst for retail and restaurants at S&P Global Ratings. Ms. Wyeth estimates that there is a 50% chance that 19 retailers tracked by S&P will default on their debt. Five retailers defaulted during the 2008 recession.

The pain is being felt acutely by mall-based apparel chains and department stores that had limped along before the pandemic. J.Crew has lost money for six straight years. Penney hasn’t booked an annual profit in nine years.

But those chains that were popular before the pandemic are drawing shoppers back as restrictions are lifted. After being largely stuck at home, people this week donned masks and lined up for temperature checks to enter Apple Inc. stores in Charleston, S.C., and flocked to luxury shops in Paris.

Read more here.

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