xml:space="preserve">
xml:space="preserve">
Advertisement

Maryland retailers prepare for unknown future after ‘crippling’ losses as coronavirus spreads

Kohli Flick, owner of Becket Hitch, is doing the best to keep her small shop afloat amid the coronavirus and plummeting sales. She's closed the shop and sent her six part-time employees home amid an uncertain future.
Kohli Flick, owner of Becket Hitch, is doing the best to keep her small shop afloat amid the coronavirus and plummeting sales. She's closed the shop and sent her six part-time employees home amid an uncertain future.(Barbara Haddock Taylor / Baltimore Sun)

Shop owner Kohli Flick knew Saturday night that she faced a wrenching decision. As the gravity of the rapidly spreading new coronavirus sunk in, she weighed whether to temporarily close her successful home goods and gift store in Greenspring Station. It would mean forgoing a lot of sales and all of her help for who knows how long.

Just 24 hours later, the answer seemed clear. She told her six-person, part-time staff at Becket Hitch not to come to work. Behind shuttered doors Monday, she quickly built up a small online presence, filling online orders and shipping goods, then showing products on Instagram: Easter goods, clothing and candles. She has been making deliveries to customers who live near Lutherville-Timonium or running out to meet them curbside.

Advertisement

It’s not business as normal,” said Flick, who doubled her selling space a year ago and now is watching sales dwindle to about a quarter of what she sees regularly. “At this point, the numbers are so far gone, that whatever there is is great. I’m just grateful for every sale or gift card that’s purchased.

What began as a trickle of stores announcing temporary closures has become a steady flow as dozens of big and small retailers take steps to slow the spread of the disease known as COVID-19 and keep even small crowds away. On Thursday, Gov. Larry Hogan ordered all malls across the state closed at 5 p.m.

“Retailers that have already invested in e-commerce are going to have a huge advantage, and small mom-and-pop retailers are going to have by far the most difficult time.”


Share quote & link

It’s uncertain whether store closures will stretch beyond the two weeks most retailers have tentatively set, but even in a best-case scenario, some experts believe shoppers will stay away at least through April. And when the dust settles, they expect store closures, layoffs and even chainwide shutdowns on a massive scale in an industry already undergoing a shakeout from online competition and changing shopper habits.

The retail sector has accounted for the most layoffs in the past three years because of store closures, said Andy Challenger, senior vice president of outplacement firm Challenger, Gray & Christmas.

“Where it will continue to change is this demand shock that we’re facing as people self-quarantine and stop going to stores and purchasing products,” Challenger said. “Most service jobs cannot be done in person and require foot traffic from customers to stay afloat. Retailers that have already invested in e-commerce are going to have a huge advantage, and small mom-and-pop retailers are going to have by far the most difficult time."

Across the nation, more than 60 U.S. retailers have reportedly made decisions in recent days to voluntarily close stores, joining schools, universities, restaurants and an array of public places as Americans are urged to stay home. Among those closing are department stores, such as Macy’s and Nordstrom, and mall and specialty stores, such as Abercrombie & Fitch and Under Armour.

Most retailers are hoping consumers will buy online instead and directed shoppers to their websites. Nordstrom, for example, emailed customers Wednesday offering 25% off online orders with some exclusions.

In Maryland, where three cases confirmed March 5 grew to 107 by Thursday, including a 5-year-old girl, and one person has died, the retail closings followed Hogan’s shutdown of schools, casinos, restaurants, bars, theaters and gyms. On Thursday, the governor also restricted access to public transportation and BWI Marshall Airport and banned gatherings of more than 10 people.

Advertisement

Retailers most at risk include companies that were already struggling, such as JCPenney, Kohl’s and Macy’s and mall stores such as Abercrombie & Fitch and Urban Outfitters, suffering from declining foot traffic in centers, said Karyl Leggio, a finance professor at Loyola University Maryland’s Sellinger School of Business.

Retailers, coming out of a weak holiday season and many already burdened with excess winter inventory, will feel the ripple effect of the national slowdown in travel and tourism.

Leggio agreed that any retailer without a strong online presence likely will struggle. Meanwhile, Target and Walmart, which sell groceries and other staples, should be able to weather the crisis, she said.

“If you are located in the mall right now, this is the worst possible scenario, shutting malls and a decline in interest of people going to the malls,” she said. “Now you’re removing the shopper."

Leggio suspects retail will be lower on the list of essential services, such as airlines, that the government is likely to assist.

On Wednesday, the National Retail Federation urged President Donald Trump and congressional leaders to help retailers, citing access to credit as the top priority until consumers return to the market.

Advertisement

“Labor and benefit obligations, rents, loan payments are all crippling burdens if no sales are being made for days or weeks at a time, and our members are suffering cumulative losses that amount to tens of billions of dollars a week,” the trade organization said in a letter to the White House and others.

The group called for a direct, government-backed loan program to offer a bridge to a time when normal business resumes.

For smaller retailers, recovery will prove most difficult, business owners and experts say.

“What everything is going to look like at the end of this is going to be completely different from what we have known so far,” said Flick, the owner of Becket Hitch. “There are going to be some businesses that don’t recover.”

Timing could hardly be worse for stores such as Wee Chic, a children’s clothing and toy shop in Greenspring Station and Fairfax, Virginia, that counts the period leading up to spring break and Easter as its biggest season. Owner and president Bridget Quinn Stickline said she is accepting one-on-one in-store appointments and taking orders by phone for delivery. She has seen two to three people a day, as opposed to 60 to 80, a drop she called “crippling.”

“We do not have an e-commerce site and are scrambling to get one up,” Stickline said. “Kids still need Easter baskets. We’re here in the shop. We can build Easter baskets for you and drop them off or ship or have you pick up at the curb.

“We don’t run our business on the edge," she said, “but we’re a small business, so there is an end to how long we could sustain having no income.”

Stickline said she believes major retailers may be able to weather the crisis, but she worries about her small-business friends and neighbors.

“Amazon is going to be fine," she said. "Those of us that don’t sell hand sanitizer and toilet paper and milk and eggs and bread are going to need a lot of special attention for a while.”

Advertisement
Advertisement
Advertisement