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As States Lift Restrictions, Retailers are Trapped on the ‘Leading Edge’

The avalanche began in an unlikely setting, for avalanches at least: Chesapeake Energy Arena, home to the National Basketball Association’s Oklahoma City Thunder, where the home team was set to play the Utah Jazz on the evening of March 11, 2020.

That game was canceled minutes before tipoff upon the league learning that Jazz star center Rudy Gobert had tested positive for the coronavirus. All in 24 hours, most of the major North American professional sports leagues suspended their seasons, March Madness was canceled, and the Boston Marathon postponed (and since canceled, for the first time in its 124-year history).

It was a singular moment in modern American history: the cancellation of sports, omnipresent even through two world wars and numerous other crises. At a time when few had fully grasped the severity of the pandemic, it underscored the choice facing businesses vis a vis their employees and customers: stay open in the face of mounting uncertainty and concerns over public safety, or close up shop and wait out the storm.

By St. Patrick’s Day, days before the first statewide orders requiring the shutdown of all non-essential businesses, some of the largest national retailers – among them, Abercrombie, Apple, Bloomingdale’s, Foot Locker, H&M, Ikea, JCPenney, J.Crew, L.L.Bean, Macy’s, Neiman Marcus, New Balance, Nike, Patagonia, REI, Sephora, Tiffany, Under Armor, Uniqlo, Urban Outfitters, and William Sonoma (in addition to Simon Malls) – made the decision to temporarily close their stores.  In contrast, California and New York required non-essential businesses to close their physical premises on March 19 and the evening of March 22, respectively.

The gravity of the choices facing businesses – and policymakers – has been underscored by the resurgence of the coronavirus across large swaths of the country, including in some of the states that had been considered among the most proactive in their initial steps to show the spread of the virus.

And, to be clear: many businesses had no choice. Some, deemed essential, may have felt compelled to remain open to serve the public, while countless others were forced to close when governors across the country began ordering brick-and-mortar establishments to close and residents to stay at home. Among those allowed to remain open, many opted not to, while others incurred costs ranging from the thousands to the hundreds of millions of dollars in health and safety measures and additional compensation.

The choice of when, how, and even whether to reopen has been more fraught than the choice to close in the first place. It is a choice driven by a combination of economic, practical, and humanitarian factors, overhung by the specter of a resurgence, which has proved a reality in certain areas.

“Shutting down was hard, but opening up is going to be harder,” Rich Lesser, chief executive of the Boston Consulting Group, told The New York Times in late Aprilwell before coronavirus cases began to peak again. Critically, Lesser said, “It’s hard enough to shut an economy down once. Having to do it twice carries far greater damage.” The New York Times (26 April 2020)

The decision facing business owners played out first in South Carolina, which had allowed some retail stores to reopen beginning April 20, and in Georgia, which allowed gyms, bowling alleys, body art studios, barbers, hair and nail salons, and other personal services, to reopen April 24 with certain limitations.

Some national chains, including Macy’s Inc., Gap Inc., and TGI Fridays Inc., initially kept their Georgia and South Carolina locations closed even after retail and restaurants were permitted to reopen their doors in those states. TGI Fridays CEO Ray Blanchette summarized the mood: “We don’t want to be on the leading edge here,” citing the risk of exposure for customers and employees. 

Others wavered in their decision on whether to reopen. Life Time Fitness initially announced plans to reopen six Georgia locations on April 24, but quickly backtracked, with CEO Bahram Akradi saying that he could not “risk the health of the members at the risk of the community for the sake of them pumping some iron.” In Atlanta, one barbershop initially announced plans to open, but reversed course after facing swift social media backlash.

Many small businesses, lacking the resources of the larger chains and the ability to remain closed any longer, were faced with the ‘damned if you do, damned if you don’t’ scenario: reopen, at the risk of economic losses if customers don’t return or the spread of the virus worsens, or don’t, at the risk of potentially losing your lease, or your business, altogether.

Russ Abbott, owner of Ink & Dagger, an Atlanta tattoo parlor, opted against reopening in the first wave: “It’s kind of obvious that tattooing is a very close and personal interaction between the artist and their client,” he told TIME. “There’s certainly no relief for the hardship we’re facing—but we can’t even imagine resuming business as usual. Social distancing is not possible in a tattoo studio.”

Mimi Bell, owner of Bell Barber Company in Savannah, Georgia, felt she had no choice but to open; she was worried about the financial wellbeing of her employees, some of whom had been denied unemployment and were anxious to return to work, while simultaneously exhausting her own savings after having been rejected for a PPP loan. “I’m torn between what’s the right thing to do and what I have to do for my business and my future,” she told TIME. “I’d love to morally be the best person I can be—but I’d have to be rich to do that.”

In Georgia, meanwhile, cases and hospitalizations have both been on the rise. On April 24, the day certain businesses were first allowed to reopen, the 7-day rolling average of newly reported coronavirus cases was 723; on July 4, that 7-day average hit a new peak, at 2,619. As of July 7, the state reported 1,962 coronavirus hospitalizations, and a 7-day rolling average of 1,692 cases – both highs. They are not alone: heading into the July 4 holiday, new coronavirus cases were increasing in 40 of 50 states.

With divergent policies from state to state, businesses – and particularly those with locations in multiple states – have reluctantly found themselves on the leading edge, yet again, in confronting the spread of the virus.

Related topics: Retail, Retail Sales