The COVID-19 induced economic crisis has hit a wide range of sectors, including retail, with social distancing measures and shift in consumer behavior to go online led to the closure of several department stores. Against this backdrop, ‘bankruptcy’ emerged as the top theme among influencer conversations related to ‘department store’ in Twitter during March-August 2020, reveals GlobalData, a leading data and analytics company.
An analysis of GlobalData’s Retail Influencer Platform shows that discussions were up as global iconic retailers such as Neiman Marcus, J.C. Penney, Century21, Stein Mart, Lord and Taylor filed for bankruptcy.
Prashant Saxena, Influencer Expert at GlobalData, comments: "Department stores are witnessing decline in footfall due to lockdowns and social distancing measures as customers are not preferring to go out and shop. Realizing the same, several department stores have ventured into online retailing. However, some of the players that did not adopt or were late to adopt any risk mitigation strategy (such as moving to the web) had a detrimental impact on their business performance, with some of them going for store closures, liquidation or filing for bankruptcy."
Some retailers have been looking for prospective buyers to avert liquidation. For instance, on 9 September, J.C. Penney announced agreement with mall owners (Simon Property Group and Brookfield Property Group) and some bankruptcy lenders to sell its business.
Aurojyoti Bose, Lead Analyst at GlobalData, says: "Several leading retailers are facing the brunt. With sales remaining muted and pressure mounting on the store operators, several have resorted to job cuts, hiring freeze/slowdown to manage costs."
GlobalData’s Job Analytics Database reveals that Walmart, Costco, Target, The Gap and Tiffany & Co were among the top retailers that have slowed down hiring drastically during March-August while some store operators such as Dollarama and Metro AG ceased hiring completely for some time.
However, there was a silver lining in the form of food and grocery retail. ‘Food’ and ‘grocery’ were the two other most discussed themes related to department store, which witnessed a surge of 260% and 110%, respectively, among influencer conversations during the reporting period.
Mr Saxena continues: "This could be attributed to the panic buying for piling stocks by customers. Food and grocery, being the essential goods, became the consumer priority due to government measures to shut non-essential business."
Realizing the potential, several mall owners are planning to open more grocery stores in their malls. For instance, in August, US-based Simon Property Group announced that it is looking towards having more grocery stores in its malls.
Mr Saxena concludes: "Diversified retailers with omni-channel approach coupled with digitalization have survived the COVID-19 crisis. Going ahead, retailers need to revamp their strategy by embracing technological advancement to cope with the dramatic shifts in consumer behavior."