The coronavirus lockdown has caused most US department stores to shut, threatening their survival. But even without the impact of virus, many retailers would still eventually have collapsed, a former Fed insider believes.
No one knows how long the closures will last, given the still-rising number of deaths from Covid-19 in the US, and retailers have been dealt a painful blow by the crisis. Neiman Marcus, a chain of luxury department stores, is reportedly set to file for bankruptcy protection later this week, having missed recent debt repayments.
“Coronavirus has acted like an accelerant you would throw on a fire,” Danielle DiMartino Booth told RT’s Boom Bust, adding that the troubles of the retail sector are a real blow, because it’s the nation’s largest employer. “We knew that Neiman Marcus would be the first one to declare bankruptcy, if there was any kind of red swan or, even worse, black swan event,” she said.
“Some of these retail deaths had been a long time coming,” she added. DiMartino Booth explained that many other major retailers just chose the wrong strategy, trying to close a number of stores instead of “rightsizing” the company to real demand level.