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Democracy Under Seige, Amazon Covid Chaos and Bankruptcy Watch: The Week Ahead

Between political chaos, a coronavirus pandemic whose tricks threaten the efficacy of new vaccines and the specter of a fresh bankruptcy wave, retail has a lot on its hands early in the new year.

President Trump finally promised an orderly transition to President-elect Joe Biden’s incoming administration and denounced the recent Capitol riots, but both are considered too little, too late.

Democracy is front and center

Prosecutors and federal agents are scrambling to identify individuals who breached the Capitol Building, and arrests are growing by the day. Lawmakers are asking tough questions as they seek answers to the massive security failure. Politicos on both sides are the aisle are pushing to impeach Trump, after some originally asked Vice President Mike Pence to invoke the 25th Amendment to remove the president from office.

New York Governor Andrew Cuomo on Friday said he’s pushing elected officials to seek a Trump resignation instead.

“I’ve seen a lot over the past four years, with this administration. But I would have never imagined anything as horrific as what happened in Washington, D.C,” Gov. Cuomo said. “This was not a political rally. This was not democracy in action. This was anarchy. This is an explosion of hate. This is the result of a leader who, for four years, actually appealed to the worst in people, appealed to fear and racism and discrimination [and] appealed to people’s fear of different people.”

Covid-19: Amazon and Target outbreaks, global malaise

Meanwhile, the feared second wave of the coronavirus pandemic continues to punish the U.S.—and the rest of the world.

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In California, Los Angeles is still being pummeled by Covid-19 infections, and the retail sector is seeing a dramatic uptick in cases.

Thursday’s Los Angeles Department of Public Health data revealed a surge in cases at Amazon facilities, totaling 245 across five warehouses located in L.A. County. The company’s El Monte warehouse fared the worst, with 85 cases, followed by South Gate (61), Hawthorne (52), Commerce (35) and Culver City (12).

In mid-December, California Attorney General Xavier Becerra filed a petition in the Sacramento County Superior Court requesting that Amazon be compelled to comply with outstanding investigative subpoenas regarding conditions at its facilities after multiple outbreaks across the country. In October, the e-commerce marketplace saw a pronounced wave of infections in its warehouses and distribution centers, prompting it to offer the “conservative” estimate that 19,800 Amazon and Whole Foods employees who were employed between March 1 and Sept. 19 had contracted the virus, out of about 1.37 million total employees.

“Nothing’s more important than the health and safety of our employees, and we’re doing everything we can to support them through the pandemic,” an Amazon spokesperson told Sourcing Journal Friday, adding that the company has invested more than $961 million in safety measures and equipment in its facilities nationwide, from masks to temperature screening technology, plexiglass shields, sanitizing products, additional cleaning teams, and an on-site testing program.

“We’ve also made over 150 significant process changes to make sure we’re keeping our team safe throughout each day,” they said, including new social-distancing measures and enhanced cleaning and sanitizing.

Those new distancing measures are now being actively monitored and enforced, the spokesperson said. Team members have been “redeployed” to perform safety-related tasks and audits. A “distance assistant” uses technology to provide employees with feedback on their social-distancing compliance via a 50-inch monitor, a camera, and a local computing device. New time clock software allows workers to utilize their mobile devices to log their hours, and Amazon has suspended exit screening to free up movement and avoid crowding near facility entrances, the spokesperson added.

The e-tail giant has faced a steady stream of criticism from its own employees, who claimed that workplace conditions have facilitated the spread of the virus in facilities that often house more than 1,000 workers. But the spokesperson said that Amazon is now taking a hard disciplinary line, and has implemented “a policy where individuals who intentionally violate our social distancing guidelines will receive two warnings—on the second documented offense, termination may occur.

Meanwhile, the health department reported 304 confirmed Covid cases at Costco’s eight L.A. County warehouses, with 71 at the superstore’s Marina Del Rey location alone. A representative for the company could not immediately be reached for comment.

While vast and bustling warehouses and distribution centers represent fertile ground for a virus to spread, 11 Target stores in L.A. County have also seen Covid outbreaks, according to the health department, which characterizes such an event as the infection of three or more people. Across its 79-store retail network in the region, Target saw 254 employee cases, with its locations in Alahambra, West Hollywood and Los Angeles hardest hit with more than 30 cases each.

“The safety of our team is our top priority, and we’ve taken a number of steps to support them,” a Target spokesperson told Sourcing Journal Friday, including “increased safety and sanitation measures, operational changes, and enhanced pay and benefits that are in place across all our stores and facilities.” Target moved to a $15 starting minimum wage in July, and offered two rounds of $200 bonuses to its frontline store and distribution center workers in July and December.

According to the spokesperson, Target has provided reusable and disposable face masks and gloves to workers across both stores and distribution centers, and has installed plexiglass partitions in checkout lanes at stores to protect employees from face-to-face interaction with shoppers. On Dec. 6, the county mandated that all retail businesses limit store capacity to 20 percent of their maximum occupancy until further notice.

“We’ve been monitoring the coronavirus closely all year and have seen that trends in cases within our team are consistent with the trends reported for the U.S. population and the communities in which we operate,” they said. The company has been in “close communication” with the local Department of Health in L.A. County, they added.

Competitor Kohl’s has seen outbreaks at two county stores, Redondo Beach (10) and Valencia (15), while Neiman Marcus’ Beverly Hills location saw 13 employee infections and J.C. Penney’s Northridge Fashion Center store saw 20.

The county’s apparel and accessories manufacturers have also faced steadily rising infection rates. Dov Charney’s LA Apparel reported 25 Covid cases at one of its Downtown Los Angeles facilities, after being shut down by the health department in July amid widespread infections, multiple deaths and “flagrant” violations of mandatory health guidelines. Two Louis Vuitton production facilities reported outbreaks, with 14 workers in Irwindale and 15 in San Dimas infected.

Across the globe, nations like U.K. are struggling to cope with new highly transmissible mutations, like one identified in South Africa. On Friday, the White House Covid task force warned that a possible new “USA variant” was fueling the spread nationwide.

Cuomo said on Friday that the spike in Covid infections was all “predictive,” which was why people were asked to “celebrate smart” and curtail the spread by not gathering to celebrate the holidays because the increase is due to community spread. As for New York, the governor said the state has one reported strain of the UK variant, that it moves fast.

Bed Bath & Beyond said continuing foot-traffic challenges will affect sales, and overseas, Marks & Spencer warned that the “latest UK-wide lockdown could potentially continue until Easter, which would impact store sales.”

Bankruptcies ahead

In a Securities and Exchange Commission filing Thursday, Christopher & Banks said it is in default on some financial obligations, including a key credit facility.

The women’s apparel retailer recently warned it might go bankrupt and has already hired B. Riley to explore alternatives.

Retail consultant Walter Loeb, who said Monday could represent a reckoning as retailers’ bills come due, expects to more industry bankruptcies this year.