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Your Mall Could Close: How Coronavirus Could Kill Retail Stores

Airlines, cafes, hotels, restaurants and theaters are shutting down as COVID-19 infects the global retail sector. As shoppers shut their wallets, a consumer-driven global recession could be the next threat posed by the pandemic.

Airlines, cafes, hotels, restaurants and theaters are shutting down as COVID-19 infects the global retail sector. As shoppers shut their wallets, a consumer-driven global recession could be the next threat posed by the pandemic.

The latest U.S. Commerce report showed U.S. retail sales for February falling by 0.5 percent, the biggest decline since December 2018, and economists expect the situation to worsen as millions of Americans hunker down in their homes instead of traveling to school or work.

Auto sales, electronics, building materials and clothing sales all dropped in February, with sales at restaurants and bars falling by 0.5 percent after the Centers for Disease Control and Prevention recommended cancelling gatherings of 50 or more people. Sporting events and concerts have also been shut down, from the NBA to Major League Baseball and beyond.

“With virus fears escalating drastically, containment measures being stepped up and high-frequency data showing that consumers are already avoiding public places like restaurants and cinemas nationwide, it looks likely that retail sales will fall sharply in March,” said Capital Economics’ senior U.S. economist Andrew Hunter.

“With spending likely to continue falling sharply over the coming weeks, the only question now is severe the second-quarter decline will be.”

“Social distancing” policies have shut not only schools but also bars, restaurants and theaters in New York, California and other states in an attempt to contain the pandemic that started in Wuhan, China last year.

“Disruptions from the coronavirus will bring the economy’s main engine to a halt,” Lydia Boussour, a senior U.S. economist at Oxford Economics in New York, told Reuters.

“As the virus keeps consumers at home and panic spreads, discretionary spending and ‘social consumption’ will take a significant hit.”

Last year saw a record number of store closures in the United States, yet this year could be even worse, according to industry analysts.

Research firm Coresight Research has predicted more than 15,000 store closures in 2020, up from last year’s 9,300. In 2019, retailers including Barneys New York, Charlotte Russe and Sears shut thousands of stores, with the retail sector losing 75,000 jobs amid the growing challenge posed by online retailers.

“I think we will see an increase in the number of Chapter 7 [bankruptcy filings],” Coresight Research CEO Deborah Weinswig said.

“Nobody knows how to deal with this.”

Although nations such as France and Italy have shut nonessential retail stores indefinitely, many U.S. retailers have been given the option to stay open. However, this has not stopped a slew of voluntary closures, including by Apple, Nike and Patagonia, while Walmart has slashed store hours. [ … ]

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