“I’m Not Ready to Put Nail in Coffin of Retail,” Says UMass Lowell Business Expert During Crisis
Tuesday, May 12, 2020
Scott Latham at the Manning School of Business at UMass Lowell told GoLocal that he is not ready to “put the nail in the coffin” of retail, in a wide-ranging interview about the future of the industry.
While 2019 saw record retail store closings and the 2020 coronavirus crisis has resulted in large retailers JCrew, Neiman Marcus, and now JCPenney headed towards bankruptcy, organizational turnaround expert Latham said he still sees a future for retail.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST“If anyone says they know [where retail is going], they’re kidding themselves — that includes me, but I can provide some guidance,” he said.
“If you look at retail as a sector, the whole sector does about $4 trillion a year across the U.S. — and still the vast majority of that is still brick and mortar — about $3 - $3.3 trillion of that,” said Latham. “I would not write off retail just yet, because what’s happening with these bankruptcies, is you’re seeing an enormous amount of flow of capital. You have investors in J. Crew and Neiman Marcus and they’re trying to remove their capital out of these companies, [and they’re] not going to be able to — they’re probably getting pennies on the dollar right now.”
“And so what will ultimately happen going in Chapter 11, there will be a restructuring plan, and they’ll try and do it in a way that will throw these companies a lifeline,” he added.
“So I’m a little different than other folks that look at retail. I’ve covered the retail sector in the dot.com recession, the Great Recession, and now the COVID recession. And in each of those, every time, it’s, ‘Uh-oh, death of retail, retail apocalypse — I’m not ready to put the final nail in the coffin yet,” said Latham. “Are there significant issues here? Yes but again smart people are overseeing billions and billions of dollars in these companies, and some will make it.”
Behavioral Component in Focus
“During the last recession, my household got $1200 in stimulus and we bought a new washer and dryer — that stimulus was designed to do exactly what it did,” said Latham. “Now, you can give me $1200, I’m not sure I’m even leaving my home right now. The adverse effect of that if I take the $1200 and spend it on Amazon, it really hurts the small business and brick and mortar companies.”
“So when I open up our discussion about how no one knows how this is going to materialize, it’s the added complexities, and the health concerns. The health concerns are somewhat rational but like many of our relatives and friends that we care about, there’s going to be a behavioral aspect that’s going to be tough for folks to overcome,” he said. “How are you going to be able to go into the clothing store and try on clothes. How are you going to go to a jewelry store and try on jewelry — the behavioral component of this recession is going to make it very difficult for retailers to plan.”
“I think you’re going to see regional fits and starts — I think you’re going to see one region move forward and get to phase two, and then there’s going to be an outbreak and have to come back to phase one, and that’s going to make it worse.”
Related Articles
- VIDEO: Raimondo Announces More Details on Reopening RI Retail, Restaurants
- Record Retail Store Closings in 2019 — Could Exceed 12,000, “Mall Armageddon” Could Hit in 2020
- Uber Slashes, Christmas Retail Trouble, Proposed East Side Hotel a Boost, and WeWork Fights to Live
- NEW: Rhode Island-Founded Cumberland Farms Sold to British Retailer
- Retailer J. Crew Poised for Bankruptcy, According to Multiple Reports
- NEW: Essential Versus Non-Essential Retailers for Closure - RI Commerce Secretary Pryor Outlines
- BREAKING: Stay-at-Home Order Issued by Raimondo for Rhode Island, All Non-Essential Retail Closed
- Proliferation of Chain Stores on Thayer St. — The Death of Locally Owned Retail?
- Retail Store Closings Are Already Piling Up in 2020, CVS Shuttering More Stores
- NEW: Retailer Payless to Close All 2,100 U.S. Stores, Including 20 in Southern N.E. UPDATED
- Retailers’ Nightmare: Amazon Gearing Up for One-Day Shipping
- Dressbarn to Close All 650 Stores — Retail Apocalypse Continues
- Retail Armageddon Heats Up in Rhode Island — Dozens of Stores Close
- Retail Apocalypse: Party City to Close 45 Stores Amid Helium Shortage
