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Retailers, Pressured to Shutter Stores, Face a Moral Dilemma

Consumer backlash against big brands that continue to operate their stores is mounting as efforts to contain the coronavirus pandemic increase. But some critics are asking them to go one step further and halt e-commerce as well.
New York on lockdown | Source: Spencer Platt/Getty Images
By
  • Sarah Kent

LONDON, United Kingdom — One by one, the dominos fell. First, Patagonia announced on Friday that it would close its US stores, headquarters and temporarily shut down its online shop. The Ventura, Calif.-based outdoor retailer was swiftly followed by progressively marketed, direct-to-consumer brands Everlane and Reformation. By Wednesday, everyone from US department store Nordstrom to French luxury group Kering had announced that their brick-and-mortar stores in America will go temporarily dark, with few hold outs left.

First, it was a matter of whether or not to cease trading. Now, as governments step up efforts to contain the coronavirus pandemic, it’s simply about when— and whether some retailers aren’t moving fast enough.

While Italy has been in full lockdown for almost a week, other European countries including France and Spain only recently introduced more draconian measures to shut down all but essential shops. In the US and UK, the governments have not issued a formal decree, though many believe it's only a matter of time.

Meanwhile, criticism of the risk retailers are placing on workers by continuing to operate is increasing, as are concerns about the payment of hourly workers, many of whom do not have healthcare benefits in the US, where the system is privatised.

It's a very poor reflection on capitalism that stores with non-essential items are open.

By the end of Tuesday, brands including Ralph Lauren, Gucci-owner Kering , Chanel and Dior, as well as US department stores including Neiman Marcus, Macy's and Nordstrom, were all putting plans in place to close stores in the country, where there are more than 1,600 confirmed cases, according to the World Health Organisation. Most of the companies said they would continue to pay employees.

On Monday, Women's Wear Daily's Executive Editor Bridget Foley asked in her column why luxury retail was continuing at all. "Dior? Chanel? Ralph Lauren? Prada? Nobody needs what they sell; by definition, luxury is a world of want, not need," Foley wrote. "For what greater good are their retail employees now endangering themselves and, should one become infected, everyone she or he comes in contact with?"

Prada declined to comment ahead of its earnings on Wednesday.

Mass market retailers are under the microscope, too. Writer, stylist and consultant Aja Barber posted an account on social media Tuesday of responses she received after asking retail workers for their views on being forced to work during the pandemic. Billionaire owners can afford to cover pay for the course of a shutdown, Barber said.

Source: @ajabarber via Instagram

“I’m really worried for a lot of retail workers; this is how it spreads, and businesses aren’t taking it seriously,” Barber said. “These employees are so scared, and I think it’s a very poor reflection on capitalism that stores with non-essential items are open.”

While many stores in the UK continue to operate, it seems likely they will follow the trend in the US in short order. Adidas said Tuesday it would close all name-brand and Reebok-owned stores in the US, Europe and Canada, after holding out beyond rival Nike. The company said it will continue to pay employees for all hours they've been scheduled to work. H&M group announced plans to close all stores in the US and Germany, adding to a list of countries where the company has already closed shop. Zara-owner Inditex declined to comment ahead of earnings Wednesday.

It translates into a tough reality for brands and a delicate ethical balancing act, as e-commerce shoppers and retailers alike are being shamed for putting unnecessary risks on those working in logistics.

“There’s a consumer consciousness being amplified by the nature of the pandemic,” said Steve Dennis, founder and president at retail consultancy SageBerry Consulting. “You don’t want to be seen as an irresponsible or reckless or dangerous brand, so you have to take those things very, very seriously.”

Faced with a protracted shutdown, brands are hunkering down and looking at how to adjust to a new and challenging reality. A litany of companies including H&M Group, Nordstrom and Victoria's Secret-owner L Brands have warned of the pandemic's impact on their financial outlook. Many are already hurting from the impact of a near-total shutdown in China in February — the first country to suffer the effects of the virus. On Tuesday, troubled British retailer Laura Ashley filed for administration, one of the first fashion casualties of the current crisis.

For businesses already in trouble, Dennis said, “this brings up the day of reckoning.”

We’re tracking the latest on the coronavirus outbreak and its impact on the global fashion business. Visit our live blog for everything you need to know.

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