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While it’s not particularly surprising to see department stores taking the pandemic hit the hardest, it’s still stunning to watch these legacy retailers take such a beating in real time.
Last week, Neiman Marcus filed for bankruptcy, receiving $675 million from creditors to keep itself afloat as it navigates the process. The crisis isn’t sparing lower price point players: JCPenney, long on the brink, is expected to begin its own bankruptcy filing this week. And Nordstrom, which has been heralded as the most digitally forward player in the space, is closing 16 stores. That’s roughly 10% of its entire fleet.
Faced with retailer woes, brands are also faltering. John Varvatos, which retails at department stores including Neiman Marcus and Nordstrom, has filed for bankruptcy. This morning, Under Armour reported a 23% sales decline in the first quarter, which tracked January to March. The brand attributed 15 points of that decline to the effects of the coronavirus, meaning its damages are only going to worsen. Under Armour is a major brand for Kohl’s, another department store that has taken several “right” steps to updating its operations, and still struggling.
The bottom line: direct retail is going to be more important than ever as the virus forces these retailers to close. Companies like Shopify are stepping up to help brands boost their direct sales, and former never-Amazon brands are biting the bullet and selling on the platform. The redistribution of wholesale will be online, and specialty stores will only exist on smaller scales.