Century-old businesses are poised to file for bankruptcy, discount retailers are flourishing
AS A BROKER for H&R Retail, a commercial-property company in the suburbs of Washington, DC, Larry Hoffman has a ringside seat to what may be American retailing’s greatest calamity in living memory. Since mid-March, when America’s capital and the neighbouring states of Maryland and Virginia closed all non-essential businesses, Mr Hoffman has spent hours every day giving counsel to shopkeepers and restaurateurs who suddenly find themselves unable to pay the rent.
The effect will be most dramatic for department stores reliant on clothing sales, because they find themselves saddled with a season or more of soon-to-be outdated clothes. For the same reason, these retailers are less likely to benefit from the pent-up demand that may be unleashed when life goes back to normal: many shoppers will simply skip seasonal wardrobe updates.
The woes of these retailers, both founded more than a century ago, highlight how the pandemic is accelerating longer-term trends. As Americans’ discretionary spending habits have changed—they shell out less on clothes than they used to and more on eating out and holidays—department stores’ sales have shrunk faster than their floor space. These changes have been compounded by the increasing dominance of big-box retailers, discounters and e-commerce.
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