Clothing Stores Face Falling Sales During COVID-19 Crisis
US retail sales in clothing stores fell by over 50% in March 2020 versus the previous year. Several retailers such as J C Penny, J. Crew, and Neiman Marcus have filed for chapter 11 bankruptcy while others are deferring commercial rent payments until they can reopen. This is putting increased pressure on mall operators who may not be able to safely reopen all of their properties. Simon Property Group has reopened 77 of its 209 US properties so far while Macerich has reopened 13 of 52 properties.
Several retailers are stuck with last season’s unsold merchandise and many are offering heavy discounts to encourage sales. Storing unsold stock until next year can be a risky move for clothing retailers operating in a trend-driven industry. As a result, it is likely that more clothing stores will turn to off price retailers like TJX, Ross Stores and B.J. Wholesale to offload unsold stock. Once clothing stores reopen, many customers will be wary of entering stores and may continue to prefer to shop online. Retailers could consider promoting click and collect orders as a way to encourage customers to return to their stores.
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