Delaware Public Media

Coronavirus pandemic leaves most retailers reeling

Apr 24, 2020

The retail sector has been slammed by the COVID-19 pandemic - with almost all stores either closed or severely limited in how much business they can do.

But not every retailer is suffering. 

Contributor Eileen Dallabrida spent this week looking at the retail landscape to see what’s happening on the ground around the First State and found there are “haves” and ‘have nots” during this crisis.

 

 

In Wilmington’s normally bustling Trolley Square, bars and restaurants have been shuttered for weeks, the first business casualties of the COVID-19 pandemic. Boutiques are dark. There’s nowhere to get a haircut, a massage or a yoga class.

But HoneyBee Seasonal Kitchen and Market is buzzing as patrons load up on certified organic kale, locally sourced, grass-fed chicken and unfiltered ginger ale. Business at the grocery store has tripled as consumers intent on keeping full fridges and well-stocked pantries place orders for in-store or curb-side pickup.

One-third of HoneyBee patrons are new customers. Many walked over from the nearby Acme after the larger chain store ran out of eggs.

“They bought eggs from us and kept coming back,” says Karen Igou, the owner.

Honey Bee Kitchen and Market is seeing new customers during the COVID-19 pandemic
Credit Delaware Public Media

With most consumers observing an order to shelter-at-home, designated essential services like groceries, pharmacies and home improvement stores are sizzling, while purveyors of clothing, sporting goods, personal services and hospitality are in a deep freeze. 

Across the board, retailers saw a 60% decline in traffic in March, with April expected to be even worse, according to Coresight Research. While the big four of retail — Amazon, Walmart, Target and Costco — are thriving, the pandemic is hastening the demise of other household names. Last week, JCPenney was unable to make a $12 million loan payment.

“This is a market of haves and have-nots,” said Jack Kleinhenz, chief economist of the National Retail Federation, a Washington D.C.-based trade group. “The haves are the stores that remain open with lines out the doors to buy daily necessities while the have-nots are the stores that have closed and are taking the brunt of the impact of the pandemic.”

Not a situation I ever envisioned’

In Middletown, James Snow has been selling art and accessories online since he had to close the Little Emporium, a gift shop that specializes in handmade items. He ships smaller items and makes home deliveries for larger goods.

“We are relying heavily on social media for sales and finding the community is really being supportive,” he says. “This is definitely not a situation I ever envisioned happening when we opened.”

Middletown's Little Emporium has shifted exclusively to online sales since having to close during the pandemic
Credit Delaware Public Media

Tanger Outlets in Rehoboth Beach, one of the state’s biggest retail draws, has been closed since March 24, when shoppers were just warming up to spring fashions. Worldwide, merchants are facing a daunting decision. Should they jettison spring fashions at a loss once stores reopen? Or mothball garments and hope they will still be stylish next year?

Across the board, profits for sellers of clothing are tattered, with March sales down 50.5 percent from February, according to the NRF and the U.S. Census Bureau. For the same period, grocery store sales were up 25.6 percent.

The pandemic shopping list

At the beginning of the pandemic, shoppers clamored for toilet paper. At the same time, Tushy, a manufacturer of bidet spray attachments for toilets, reported a tenfold increase in sales.

Consumers who are now flush with Charmin are turning to other personal needs, buying hair color and beard trimmers. Sales of hair clippers are humming, up more than 160%, according to the research firm Nielsen. As self-isolating turns to settling in, folks stuck at home are rolling up their sleeves and baking. Yeast sales rose 647%.

Here are a few best sellers from online behemoth Amazon, where shoppers are spending 35% more than usual:

  • Cold and flu medicines are selling at a fever pitch, spiking 861%
  • Animal lovers are looking out for Fluffy and Fido. Pet food sales have jumped 964%
  • Americans like to munch while watching Netflix. Sales of chips are up 367%

The next great shortage will be condoms, according to a warning from the United Nations. Manufacturers in Malaysia have been shutdown as coronavirus infections sweep Southeast Asia.

Hard times for hospitality

While consumers stockpile food, restaurateurs are struggling. A number of restaurants, such as Grub Kitchen and Bar at Concord Mall, already have decided they won’t reopen.

At Kid Shelleen’s Charcoal House & Saloon in Wilmington, management is using the downtime productively, replacing the floors in the popular venue.

“We don’t want to close again once we re-open,” says owner Xavier Teixido of Harry’s Hospitality Group.

The owners of Kid Shelleen's are trying to get renovation work done while the restaurant is closed during the pandemic.
Credit Delaware Public Media

Meanwhile, Teixido and business partner Kelly O’Hanlon have shifted takeout operations to Harry’s Savoy Grill, their North Wilmington restaurant.

Revenue from takeout is averaging about 10-15% of the total sales the restaurants brought in when they were up and running.

“It’s not profitable but it does keep people around,” Teixido says.

To support employees, the hospitality group has conducted fundraisers, extended health benefits for workers through May, and is cooking family meals for staff to pick up at the restaurant.

Teixido describes the pandemic “like Jaws coming out when you are at the beach.”

“The biggest challenge we have is the duration of this. We were the first to get shut completely and we probably be the last to reopen. And when we do reopen it will be with very low occupancy.”

Beyond loans, Teixido is an advocate of direct government grants to restaurants that will help get operations up and running when restrictions are lifted. Many vendors and landlords are deferring payments now but bills eventually will come due.

“Adding debt to businesses that are already impaired is not going to help the situation,” he says.

The new normal

When businesses to start to reopen, barber shops and beauty salons are expected to ramp up quickly. But expect such safeguards as masks and gloves as hairdressers have a “closeness rate” of 92.17%, according to a Federal Reserve study.  By comparison, occupational and physical therapists work at 90.5% proximity.

Analysts expect practices such as contactless payment and curbside pickup will continue even after stores reopen. Merchants are expected to limit the number of shoppers that can be in a store at any one time.

Fear of returning to shopping malls could haste the demise of already struggling properties like Concord Mall
Credit Delaware Public Media

A study by Morning Consult, a data gatherer, found that 24% of shoppers say they won’t feel comfortable shopping in malls for more than six months after restrictions are lifted. That could be a devastating blow for Concord Mall and Dover Mall, which already struggle with low occupancy rates. Only 4% of shoppers say they will be back in stores within a month after reopening.

Meanwhile, online shopping is zooming at a far greater pace than expected before the pandemic pummeled traditional retail.

"The growth of e-commerce is going to accelerate by at least five years, if not 10 years," says Guru Hariharan, CEO of CommerceIQ. "Brick and mortar stores are losing big right now." 

Consumers have rapidly adapted to the new normal, in which there is no squeezing of melons and no cash changes hands. Retailers have adjusted, too.

When Catherine Cambridge runs low on fresh fruits and veggies, she calls Highland Orchards, a family-owned farm market near her home in North Wilmington,  places an order and pays via credit card.

Soon after, she drives to Highland Orchards’ farm on Foulk Road, where a worker wearing a mask and gloves carries her order to the car and places it in the trunk.

Small markets like North Wilmington's Highland Orchards are finding some success with curbside pick-up sales
Credit Delaware Public Media

“It works great,” she says.

In the not-too-distant past, most shoppers at HoneyBee stopped in for unique products, such as gluten-free takeout meals or elderberry juice syrup, a home remedy for flu and colds. Now, HoneyBee is filling more big orders, including staples like farm-fresh ground beef, russet potatoes and paper towels.

“We are selling tons of baking flour and yeast, which we sold very little of before,” Igou says.

Keeping up with demand has been hard. Early on, several staffers at the store quit because they didn’t want to risk working with the public during the pandemic.

A large sign by the entrance lays down the rules. Stay 6 feet from one other and from the staff. Only one person in the store at a time. If you are sick, don’t come in.

“There is no fraternizing in the store. If you are not shopping, you are leaving. We have to be jerks about it,” Igou says.

The staff, wearing masks and gloves, wipes down surfaces in the store every hour with disinfectant. Reusable shopping totes are not permitted.

“It breaks our hearts to send everything out in single-use plastic bags. But we have to put safety first,” she says.

 

Changes in the way you shop

 If you head out to do some shopping here's sone changes you'll find:

 

  • Aldi has set up one-way aisles and is limiting store occupancy to five shoppers per 1,000 square feet. There are limits on high-demand items like hand sanitizer, flour and toilet paper.
  • BJ’s is offering home delivery via the Instacart to customers who live within a 15-20 minute drive from the store, although time slots are hard to get. There’s a flat $14.99 fee. Shoppers also have the option of ordering online for curb-side pickup at the store or shipping purchases. The warehouse store also has rolled out an Appreciation Hour for first responders and healthcare workers, who can shop at BJ’s without a membership from 8-9 a.m. on Sundays.
  • Costco is no longer handing out food samples. The warehouse store is expanding its hours, opening for seniors from 8-9 a.m. on Tuesdays, Wednesdays and Thursdays. Shoppers may be accompanied by only one guest. At the Christiana store, shoppers enter with carts in a single file through a wide chute outside the store, where they are directed into the store, one at a time. Shoppers also must maintain a distance of 6 feet at checkout. There are limits on purchases of toilet paper, bottled water and other high-demand items.
  • Giant has rolled out one-way aisles and is limiting the number of shoppers to 20% of store capacity. No rainchecks or substitutions due to supply constraints.
  • Sprouts Farmer’s Market has shut down salad bars and other self-serve stations and is enforcing social distancing practices. The hours of 8-9 p.m. are designated for employee shopping.
  • Target is providing employees with masks and gloves and is wiping down touchscreens and checkout lanes every 30 minutes. Purchases of hand sanitizers and disinfectants are limited. The chain also is beefing up its drive-up service.
  • Trader Joe’s has stopped giving out samples and is limiting the number of shoppers, based on the size of the store.
  • Wakefern Food, the cooperative for ShopRite stores, takes the temperature of employees and vendors when they arrive at stores and warehouses using non-contact forehead infrared thermometers. If you have an elevated temperature, you can’t go in. Like most other grocers, ShopRite installed Plexiglas shields at cash registers and all cashiers wear masks. Floor markers make it easier for shoppers to practice social distancing.
  • Walmart is limiting occupancy to 20% of the store’s capacity. Workers are allowed to place groceries in car trunks and on doorsteps without interacting directly with customers. The retailer is placing limits on purchases of high-demand items.