Despite rosy sales forecast, coronavirus still plaguing retailers
The National Retail Federation is predicting another uptick in overall sales this year, but the cheerful forecast comes at a time when many marketers are concerned about the effects of the coronavirus on future sales and supply chains.
On Wednesday, the NRF announced that retail sales should increase between 3.5 percent and 4.1 percent to between $3.93 trillion and $3.95 trillion. The forecast follows last year, when sales were up 3.7 percent to $3.79 trillion.
On a press briefing call, representatives from the retail trade association remained cautious about the effect from the coronavirus, which carries the official name of COVID-19. On the NRF’s homepage, a “Coronavirus update” section links to resources for retailers.
“Retailers on behalf of their associates and their customers are being extraordinarily thoughtful about the way in which they’re preparing for what might happen,” said Matt Shay, NRF president, on the call. “At the moment, there’s a lot of preparation going on and an abundance of caution.”
Already, supply chain experts have said there are issues with shipments from China for both fashion and toy brands. Panjiva, the supply chain research unit of S&P Global Market Intelligence, found that China represented 84 percent of U.S. toy imports last year. The majority of products from toy makers Mattel and Hasbro come from China, according to Panjiva.
“It’s really hard at this point to point to any one sector that’s overly impacted versus the others, but it’s obviously a concern when you think about how integrated the supply and final product line and transportation to and from that part of the world back to the U.S. are,” said Jack Kleinhenz, chief economist for the NRF, on Wednesday’s call.
On its fourth-quarter earnings call this week, Macy’s said it has seen “some slowdown” in sales from tourists at locations in the U.S. with a strong Asian base, such as its store in Flushing, Queens, New York. Sourcing has also been affected.
“We expect a slowdown,” said CEO Jeff Gennette on a call with analysts. “We have seen a slowdown of product that's flowing out of China, nothing concerning yet. And we're watching this one very, very carefully.”
Anticipating less merchandise because of supply delays, some Amazon merchants are cutting back on advertising, according to a recent report from Bloomberg News.
Consumers have been stocking up on items like hand sanitizer and face masks, according to a spokeswoman for Walgreens. She says that the drugstore has been regularly sharing information with its pharmacy team to answer patient questions and provide the latest information available.
“We continually and closely monitor these types of situations to ensure we can meet the needs of our customers,” she says.
Meanwhile, even as Fashion Weeks around the globe see fewer attendees and shows—Seoul Fashion Week, slated for mid-March, was just canceled—some fashion brands are looking at ways to stop the virus from spreading further.
Last week, Dolce & Gabbana announced it is partnering with Humanitas University on a study to better understand the coronavirus and how to defend against it.