The pandemic is dividing the industry into potential winners and losers, with
That means potentially a lost year for
The most obvious reason that big-box stores are weathering the economic storm better than department store competitors is that
The sheer size of the big-box competitors, offering everything from food to clothing, helped qualify them as essential businesses that were allowed to continue trading.
Customers still wary about heading into crowds might even consider the big-box stores, with their signature open layout and wide aisles, as a more comfortable place to shop.
Meanwhile, after years of building up solid distribution networks and digital sales they've also made it easier for people to order and pickup items or have them shipped directly to their homes.
Consumers will likely continue to do a large part of their shopping on computers and smartphones even as physical stores reopen to customers. That leaves companies with both a strong physical network of stores and solid online operations in a much better position to take advantage of the swelling e-commerce trend, according to a report from credit insurance company, Euler Hermes.
That trend could make it even more difficult for department stores focusing on clothing and apparel to catch up after exiting the crisis with depleted balance sheets.
“U.S. apparel and footwear retailers are undergoing a sector-wide shock that will push weak players into default and reverberate into 2021,” Moody's senior analyst Raya Sokolyanska said in a report.
The virus pandemic nudged an already struggling
Meanwhile, many of the larger department stores now have less money to invest in new operations, including their digital and distribution capabilities.
“This will further increase the priority of digital investments, widening the divide between companies that have the means to invest and those with limited financial resources,” according to Moody’s.
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