Restaurant operator NPC International, which has been in business since 1962, announced a bankruptcy filing yesterday. The company operates more than 1500 Pizza Hut and Wendy’s locations.
NPC did not announce any store closings, and the filing is meant to address its $900 million–plus debt load. Financial explorations predate the pandemic.
The Financial Times recently posted an excellent exploration of L’Oreal’s digital future, and the changes the company has seen due to the pandemic.
“In ecommerce,” said Chief Digital Officer Lubomira Rochet, “we achieved in eight weeks what it would have otherwise taken us three years to do.”
The cosmetics company had already embraced digital tactics for marketing and product exploration that replicate the experience of visiting a store’s make-up counter. Now, it is forecasting a world where 50% of its sales come from ecommerce, up from 20%, and a large majority of customer contacts occur online.
Children’s restaurant and entertainment chain Chuck E. Cheese filed for bankruptcy this week, citing the damage wrought by extended store closings. One wonders if the protocols that will be in place for the foreseeable future–crowd limits, hand sanitizing–could preclude the chain from ever reopening successfully.
Struggling vitamin and nutrition retailer GNC announced a chapter 11 bankruptcy filing, with plans to close nearly 1200 of its 5800 retail locations. The company cited covid-19–related store closings as a main driver of the filing.
GNC did secure $130 million in financing to endure the pandemic and successfully emerge from the bankruptcy process.
AMC Theatres may not be able to survive the coronavirus shutdowns, the company revealed in its latest regulatory filing.
The company, the world’s largest movie theater chain, told the Securities and Exchange Commission that it had “substantial doubt” it could withstand the reopening process, despite securing credit lines and restructuring debt to help it endure the current landscape.
AMC acknowledged as causes the uncertainty around the timing of reopenings, the altered capacity quotas many locations will face, and the reconfigured calendar for new releases. With 40% of ticket sales typically going to customers over the age of 50, who may be slow to return to a crowded movie theater, the company needs to work toward an operating model that can keep its doors open.
One thing After Shopping hadn’t anticipated upon launch was the potential impact of looting on the retail landscape. An unfortunate side effect of recent protests is the ancillary result: groups of instigators and opportunists, seeing an outlet in the mayhem, trashing all manner of stores in all manner of neighborhoods.
An article in today’s New York Times sums it up well: amid the crowds and their waves of anger, some of those waves are cresting with shattered windows and emptied stores. The result is shopping corridors gutted of commerce, and storefronts likely to be shuttered for weeks or months, as shop owners grapple with replacing fixtures and merchandise, making essential repairs, and negotiating with insurers.
We will be looking for news on the fallout of these actions in the coming days and weeks, once the protests—and looting—calm down and retailers begin to take stock of the damage.
CNN summarized May’s bankruptcy filings by retailers and other consumer industry operators, including a few covered in this space as well as some new notes. Among them:
- Department store chains JC Penney and Neiman Marcus
- Discount home goods retailer Tuesday Morning
- and Gold’s Gym, which vows, “We are absolutely not going anywhere.”
As noted in the article, “A bankruptcy filing doesn’t necessarily mean a company will go out of business. Many use bankruptcy to shed debt and other liabilities while closing unprofitable operations, in hopes of emerging leaner and stronger. … Still, many other brands that have filed for bankruptcy with the intention of staying in business didn’t survive.”
One Axios commentator thinks the corporate bankruptcy wave has just gotten started, noting that many of the ones to date had pre-existing financial stressors prior to the lockdown period. More filings are likely to follow as the full impact of the virus on retail sales becomes more clear.
Something to look out for in the near term in shopping is a glut of merchandise in non-essential segments. Fashion, for one, will be dealing with high inventory levels as stores reopen, particularly at fast fashion chains like H&M. This could mean good deals for shoppers, as well as headaches for sellers, who need to clear out merchandise and make room for upcoming stock, presuming supply chain disruptions have been kept to a minimum.
The Wall Street Journal speculates that retailers might see “years of depressed profit margins” as they try and reset after the pandemic—and that savvy shoppers could snap up some great deals this summer.
Modern Retail has begun a series on store reopenings post-lockdown, starting with today’s piece on what stores will look like this summer.
Their takeaway: expect carefully thought-out experiences that begin before shoppers even get to the door. Gone are the days of wandering into a store to browse. Instead, we’ll see more queuing, curbside pickup, and lots of communication about how and why. We’ll see an increased reliance on technology from introduction to post-purchase. And, more often than not, employees will be wearing masks.
There’s a lot more detail in the piece, which is very much worth the read. (h/t LeanLuxe)
From CNN Business, a report on how brands are working on understanding the changed retail landscape—”the shift to online buying is accelerating, consumers are buying more products for their health and home, and they are becoming increasingly cost conscious”—and the ways they can adapt.
While the situation is fluid, leading to a pressing need for flexibility, the brands discussed here all acknowledge the likely permanency of a greater ecommerce footprint, and of consumers’ greater need for cleaning supplies, soaps, and groceries high in zinc and vitamin C.