The biggest coronavirus risk to retailers on both sides of the Atlantic may turn out to be empty stores rather than empty shelves.
As the outbreak has spread from Asia to Europe and the United States, concern has shifted from the effects on supply chains because of closed Chinese factories to the potential of the deadly disease to put a sudden brake on consumer spending.
While fashion chains and do-it-yourself merchandisers rely less on China today than they did a decade ago, it’s inevitable there will be some supply problems. The country still is the world’s biggest clothing exporter, and it makes everything from paddling pools to power tools.
Athletic apparel maker Under Armour recently has warned of the risks.
A full understanding of the impact will come later. Many spring fashions and home furnishings were shipped before the outbreak, and there is evidence that factories are returning to work.
But the closures in February will mean that some orders for the summer and potentially even the back-to-school shopping seasons may not reach stores in time.
For apparel retailers, this is a particular risk. If say, pastel-hued coats designed to be worn in the spring arrive when the weather is warmer, those coats will need to be discounted to sell.
But some canceled orders may be a blessing.
The worry now is not that shoppers won’t find what they are looking for, it’s that they won’t hit the mall and spend time browsing for it in the first place. Almost half of United Kingdom retailers surveyed by Retail Economics consultants and law firm Squire Patton Boggs already had seen a negative effect on their sales, with three-quarters expecting revenue to be hit if the virus continues, according to a report published on Wednesday.
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This adds to anecdotal evidence, from some retailers finding trading tougher than expected to others seeing footfall weaken.
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