Joseph Italiaander / September 21, 2020
Among other things, 2020 has provided plenty of alarming headlines surrounding the state of the retail market. Perhaps what stands out the most to me is the growing number of bankruptcies among some of the country’s most established brands, including: J.C. Penney, Neiman Marcus, GNC, Lord & Taylor and Stein Mart. As a result, these filings have contributed to a growing number of vacancies, along with softening retail rents at many of America’s malls and shopping centers. These circumstances alone could make the case that retail is trending in the wrong direction, and the ‘light at the end of the tunnel’ is nowhere in sight…
But there have also been glimmers of hope in 2020 – Retailers like Home Depot and Lowe’s have reported double-digit growth in net sales year over year as a result of the home improvement boom spurred by the pandemic.
Similarly, cornerstone retailers like Target and Walmart have poured millions of dollars into technology adaptation, establishing a stronger online presence and enhanced customer loyalty programs. Both reported Q2 2020 earnings well above the Wall Street Earnings-Per-Share estimate. Additionally, Target has continued to expand its’ real estate footprint during the pandemic – including two new high-profile store leases signed in Manhattan.
Target isn’t the only retailer actively growing during this time. Here in Greater Portland, we recently saw the completion and grand opening of Market Basket’s new 80,000 square foot Westbrook location at Rock Row – which reported a whopping first-week revenue of $1.9m and welcomed customers who traveled from all over Maine to visit the store.
My belief is that the COVID-19 pandemic did not create problems for America’s struggling retailers, but rather expedited them. Groups like J.C. Penney and Stein Mart were never willing to invest in and adopt a true omni-channel presence like many of their now-thriving competitors, and thus had been paying the price for many years. Going forward, I believe that we will continue to see impressive growth from innovative and forward-thinking brands. Additionally, I think that we will see the emergence of new retail concepts that are capable of true long-term success.
So, will retail go the way of the dinosaurs? Or is the sector poised for a comeback?