How much pent up shopping demand is there?
When retail stores across the country began closing to customers back in March, the hope was that Americans would come back and make up for lost time and sales when states began to let merchants reopen. Based on at least some initial reports, many merchants are pleasantly surprised to find out that there was more pent up demand for goods than they expected.
American Eagle Outfitters, Kohl’s and Macy’s are three chains that have reported that, despite fewer hours, limited shopper capacity and concerns about the spread of the novel coronavirus, people are showing up to shop.
American Eagle reported last week that the 556 stores it has reopened are generating about 95 percent of the sales the retailer reported last year. At the same time, digital sales which picked up significantly while stores were closed, have remained strong. COO Michael Rampell told analysts on the retailer’s first quarter earnings call that digital sales for the company’s namesake chain were up about 50 percent on a quarter-to-date basis and that Aerie’s online business was up more than 100 percent.
Kohl’s has seen sales at reopened stores in late May grow from about two-thirds of their pre-pandemic level to three-quarters this month, according to a Wall Street Journal report.
Macy’s, which announced that it has raised $4.5 billion in new financing to give it the liquidity it needs to move ahead, has seen sales of about half what they were before the pandemic hit. That’s an improvement over the 85 percent drop that took place while stores were closed. The retailer has reopened roughly 450 of its stores to date.
Even with some hopeful signs that retail is ready to rebound in a big way, there are reasons for concern. Confirmed cases of COVID-19 are on the rise in 19 states, while seven states are remaining steady and 24 percent are seeing declines. With states reopening, nice weather and large rallies to protest racial inequality in cities and towns across the country, there are concerns that virus cases will spike.
CNN reports that Arizona, which recently began letting businesses reopen to the public, has issued a warning to hospitals to limit elective surgeries, with 76 percent of beds now occupied in intensive care units across the state. At the peak of the virus’s spread in the state, 78 percent of the ICU beds were occupied. North Carolina, which has also been reopening in phases, recently reported a single-day high for COVID-19 hospitalizations at 774.
- American Eagle Outfitters, Inc. (AEO) CEO Jay Schottenstein on Q1 2020 Results (Earnings Call Transcript) – Seeking Alpha
- Shoppers Surprise Retailers by Returning to Stores – The Wall Street Journal
- Has Macy’s secured its future success with its new financing deal? – RetailWire
- 19 states see rising coronavirus cases and Arizona is asking its hospitals to activate emergency plans – CNN
DISCUSSION QUESTIONS: What are your expectations for retail sales as stores reopen to the public? Should retailers moderate their reopening plans based on the expectation of another major spike in COVID-19 cases?