As a tsunami of store closures continues to pummel the retail sector, threatening to decimate the spring sales season. Now, the National Retail Federation (NRF) is reaching out to the federal government for a lifeline.
In a letter addressed to the White House and Congressional leaders, NRF president and CEO Matthew Shay implored President Trump, Treasury Secretary Steve Mnuchin, Majority Leader Mitch McConnell, Minority Leader Chuck Schumer, Speaker of the House Nancy Pelosi and Minority Leader Kevin McCarthy to take aggressive economic measures to save the retail industry.
“Retail is the nation’s largest private sector employer, supporting one in four U.S. jobs—52 million working Americans; and the decisions being made in Washington this week will have lasting effects on our businesses, our associates and the communities we serve,” Shay wrote.
Retailers are beholden to the “crippling burdens” of rent and loan payments as well as benefit obligations, Shay explained, adding that NRF members are suffering cumulative losses of tens of billions of dollars each week that sales are stalled.
He asserted that a government-backed loan program would help businesses bridge the gap between today’s period of uncertainty and the resumption of normal business operations.
Changes in tax law could also provide retailers with more liquidity, he said, praising the White House for its Tuesday announcement that tax filings and payments could be deferred by 90 days.
“Allowing businesses to file amended returns to recoup their overpayment of taxes as a result of the error in the qualified improvement property provision of the 2017 tax law would also return as much as $15 billion a year to retail, restaurant and hotel businesses,” Shay said, adding, “Reinstating the net operating loss carryback (NOL) would also allow businesses that are losing money this year to monetize those losses earlier than otherwise allowed by applying them against past years’ taxable income.”
Finally, Shay said, NRF members are deeply concerned about sustaining their retail workforces amid the temporary store closures.
“Assistance in providing for payroll costs might help slow layoffs that will be inevitable if retail sales continue to collapse,” he said, adding that expanding the employee retention tax credit to businesses being hit hardest would help to offset the burden.
The missive comes as even more retailers shared their store closing news.
In a statement on Tuesday, Saks Fifth Avenue said it would be temporarily closing all of its stores across the U.S. and Canada for two weeks, beginning Wednesday.
Neiman Marcus CEO Jeffrey van Raemdonck wrote in a letter to customers on Tuesday evening that the company would be closing its stores, along with Bergdorf Goodman and Last Call by Neiman Marcus locations, for the next two weeks, effective immediately.
Like many other retailers that have announced similar decisions, Saks Fifth Avenue and Neiman Marcus said they would continue to pay store associates during this period.
H&M Group also announced Tuesday that it would be closing its stores across the U.S. and Germany, Canada, Belgium and Portugal for two weeks beginning Wednesday. The company closed its stores in Switzerland, Greece, Slovakia, Lithuania, Peru, Ukraine, the Philippines, Malaysia and Cyprus on Monday.
In a quick tone reversal, J.C. Penney said Wednesday that it would be closing its doors at the end of the business day, and would remain shuttered through April 2.
This announcement came less than 24 hours after a statement from the company announcing a reduction in business hours across its fleet of 850 North American stores.
“With the effects of the outbreak being felt more each day, our primary concern and area of focus is and has been on the health and safety of our associates, our customers, and our communities,” Jill Soltau, the company’s CEO, said in an emailed statement Wednesday. “We know this is a critical, unprecedented time and our thoughts are with those who have been impacted.”
As the uncertainty continues to mount, retailers are increasingly looking to online channels as a means of keeping their businesses afloat.
London-based retail technology company Edited offered tips for retailers looking to bolster their e-commerce strategies in the wake of COVID-19-induced disruptions on Wednesday.
The firm urged businesses to rethink the heavy discounts that have become a popular sales strategy for the spring season. While March routinely sees an influx of sales, retailers should resist the urge to lure in consumers by slashing prices, as it will impact their margins.
“There’s currently no end date for this pandemic, so retailers need to plan for the worst case scenarios,” analysts said. “Uncertainty and delays to supplies means that you’re less likely to want to clear stock as in the past.”
Instead, the group encouraged retailers to consider shifting back to a traditional end-of-season sales event in July or August. And in the meantime, they can employ “spend more, save more” promotions that would incentivize consumers without decimating brands’ bottom lines.
Edited also encouraged retailers to promote shipping offers to stand out against competition, during a period where nearly all sales will be dependent on home delivery. Businesses will need to coordinate thoroughly with their warehouses and distribution centers to ensure a seamless shopper experience.
“Make customers aware of any delays to delivery ahead of purchase,” the group advised. If unforeseen circumstances arise and retailers are unable to fulfill their promises, they must deploy clear and consistent customer service to manage shoppers’ expectations.