How Covid-19 Is Exacerbating the Churn in Retailing

Brick-and-mortar retailers were in trouble well before the coronavirus pandemic. A shift to online shopping since the turn of the millennium along with rising costs and over-expansion, especially in the U.S., had already forced many stores to close. The arrival of Covid-19 intensified the struggle to stay in business and accelerated changes in how and where consumers spend their money.

Pandemic-related lockdowns presented an immediate cash flow problem for retailers of all stripes as non-essential stores were shut. The American shopping mall mainstay J.C. Penney, mid-range clothier J. Crew and luxury retailer Neiman Marcus -- all three already burdened with heavy debt -- filed for bankruptcy protection in May. Renown Inc., a century-old Japanese apparel maker with brands including Arnold Palmer and D’Urban, also fell victim after years of losses. Retailers across the globe have been borrowing more money, negotiating with landlords and creditors and accessing government support to cover paychecks in a bid to ride out the crisis.