Former Macy‘s CEO Terry Lundgren instructed CNBC on Monday he expects coronavirus pandemic-related disruption for the retail trade to persist effectively into subsequent yr, main doubtlessly to extra retailer closures.
“We’re not done yet. … We’re going to learn even more when we get through the holiday season,” Lundgren stated on “Power Lunch.” “Retailers who have a weak balance sheet today aren’t going to get relief in January. It’s going to get tougher. When the volume of purchases drops dramatically after Christmas, the expenses remain.”
More than 11,000 retail location closures have been introduced in 2020, in accordance to a report from actual property agency CoStar Group. The closures come as the Covid-19 pandemic helped usher in an acceleration of on-line buying, which was evident in the course of the vacation season. On Black Friday final month, for instance, on-line spending was up 22% yr over yr, in accordance to information from Adobe Analytics.
“This movie is not finished. I suspect we’re going to see more closings throughout 2021,” stated Lundgren, who was Macy’s chief govt from 2003 to 2017. He retired from its board of administrators in 2018.
That could also be dangerous information for each small, impartial retailers and bigger corporations in an economically precarious place, Lundgren stated. However, he stated ultimately these companies with brick-and-mortar areas that outlast the pandemic will profit.
“They’re actually going to have an opportunity to grow again. That’s the upside, the green shoots, from that perspective of store closures,” Lundgren stated, predicting it’s “probably not too much more than six months from now.”
While the pandemic and its financial penalties had been the principle drivers of retail closures this yr, Lundgren contended that another excuse the quantity has been so excessive is as a result of the U.S. had too many shops to start with.
“We’ve been an over-stored country for more than a decade. It’s been something we’ve been working to try to slowly and gradually correct but frankly, we have too many physical stores,” Lundgren stated. “There had to be a contraction of physical stores,” he added. “It’s just aggressively accelerated here in the last year.”