WSL Future of Health Event

Retail sales plummet after surge

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NEW YORK — The full force of the coronavirus pandemic slammed the overall economy and the mass market retail industry in March, requiring unprecedented operational responses from chain managements and workers. While the ultimate impact of the outbreak, both on companies and on millions of individuals remains unclear, essential retailers have emerged as perhaps the most critical resource after health care professionals that Americans have.

In February it became apparent that COVID-19 was spreading beyond China, and the first confirmed cases occurred in the U.S. As the number of cases rapidly multiplied and the prospect of a global pandemic became clearer in March, an enormous wave of panic purchasing of certain everyday products, including hand sanitizers, cough/cold remedies and — inexplicably — toilet paper swept parts of the country.

That buying binge presented a number of retailers, particularly those that sell groceries and consumables, with extraordinary sales volumes that strained their supply chains to the limit. But just as suddenly, after citizens in many affected parts of the country were urged to stay home and maintain “social distancing” to limit the disease’s spread, customer traffic counts and sales plummeted in the last week of March.

For example, Kroger Co., the nation’s largest supermarket operator, reported that customers began stocking up in late February and sales and traffic accelerated dramatically in March, with identical-store sales excluding fuel skyrocketing roughly 30%. Volumes tapered off but remained higher than normal during the month’s final week.

Demand, the company stated, has been broad-based across grocery and fresh departments, and concluded, “It is too early to speculate what will emerge as the ‘new normal’ in food consumption at home or what the impact on sales will be in future periods.”

For its part, Costco Wholesale Corp. saw its U.S. comparable sales climb 12.1% in March (excluding the impact of fuel price changes), following an 11.6% spike in February. That figure, which disappointed investors, was constrained by limits on customer traffic, reduced store hours and the closure of certain departments, according to the company.

Although Walmart, following its usual policy of not releasing monthly sales figures, did not provide visibility into its March sales cadence, Bloomberg News cited “internal documents seen by Bloomberg” that stated sales in Walmart U.S. rose 17% during March. The company did disclose that it experienced a surge in demand for such items as hair color, beard trimmers and sewing machines after millions of Americans were either laid off or furloughed or opted to stay home.

“All the do-it-yourself types of items like hair coloring and beard trimmers are selling quite well,” Dan Bartlett, executive vice president of corporate affairs, told CNBC. “Sewing machines are flying off the shelf as well, because a lot of people are selling and making their own masks at their house.”

The world’s largest retailer has hired more than 100,000 additional workers to fill mostly temporary positions to cope with the pandemic. According to Bartlett, many of the new hires are from industries that have been hard hit and the Walmart jobs constitute a lifeline, at least for now.

Similarly, Albertsons Cos. is collaborating with major companies to provide part-time jobs to their employees who have been furloughed or had their hours cut.

Dollar General Corp. has also responded to the situation by announcing it will nearly double its normal hiring rate to add up to 50,000 employees by the end of April. While many of those jobs are expected to be temporary, a number of the new hires will be eligible for bonuses totaling $35 million that the company will distribute to all store, distribution center and transportation fleet employees who worked during a six-week period beginning in mid-March.

At the same time that panic buying was emptying store shelves in many chains and placing extraordinary demands on store and logistics personnel, the spread of COVID-19 was making those employees among the most exposed and vulnerable workers in the country. Most major chains have now implemented a variety of initiatives to try to maximize the safety of both their customers and their associates. Limiting the number of customers in-store at one time; executing social distancing protocols, including one-way aisles and register queuing to control traffic flow; and installing Plexiglas panels at checkouts are now common measures.

Some chains have gone further. Albertsons is partnering with the United Food and Commercial Workers International Union (UFCW) in a joint national effort to seek a temporary designation of “extended first responders” or “emergency personnel” for supermarket associates, to ensure that they are given priority for COVID-19 testing and given personal protection equipment.

Some retailers, unfortunately, only carried out such basic measures as providing employees with face masks, gloves and hand sanitizer after media exposure of employee complaints that their safety was being ignored. But the risk is real, and a few major chains have reported a small number of employee deaths from COVID-19.

The industry is responding as the number of deaths in the U.S. has exceeded 22,000 and the number of confirmed cases has topped half a million. Wakefern Food Corp., which operates many stores in New York, the epicenter of COVID-19 in this country, has instituted a temperature monitoring program that will use noncontact forehead infrared thermometers to take the temperature of employees and vendors as they arrive at stores and warehouses. Walmart has implemented a similar program.

In a recent message to all Walmart associates in the U.S., president and chief executive officer Doug McMillon lauded their courage and dedication.

“We all know health care workers, first responders and military personnel when we see them: We recognize their uniforms,” he wrote. “And because of what they do, they deserve our deepest admiration and respect. They are courageous. And so are you. You deserve a great deal of respect and admiration, and your uniform — the vest you wear — should be recognized as a symbol to everyone of your enormous service and ­commitment.”

McMillon’s words can apply to all of the retail workers worldwide who stand in the front lines of the struggle to cope with the coronavirus and its effects.


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