Retailers brace as virus bears down on consumers and economy

By CHRISTOPHER RUGABER and ANNE D’INNOCENZIO, The Associated Press

WASHINGTON — LaTonya Story is every retailer’s worst fear.

With the viral pandemic resurging through the country and the economy under threat, Story has decided to slash her holiday shopping budget. She’ll spend less than $2,000 this season, down from several thousand dollars in 2019. Worried about entering stores, she’s buying gifts online and going out only for groceries.

“I want to be conservative,” said Story, a 47-year-old Atlanta resident. “I’m not a scientist, but the best precaution is to stay in place.”

The acceleration of coronavirus cases is causing an existential crisis for America’s retailers and spooking their customers just as the critically important holiday shopping season nears. It’s also raising the risk that the economy could slide into a “double-dip” recession this winter as states and cities re-impose restrictions on businesses and consumers stay at home to avoid contracting the disease.

An anxious consumer is a frightening prospect for retailers as well as for the overall economy. Any sustained recovery from the pandemic recession hinges on consumers, whose spending fuels about 70% of economic growth.

So as the virus rampages across the nation and with holiday sales expected to be weak and heavily dependent on online shopping, retailers are considering extraordinary steps to draw customers.

Some, like Giftery, a small shop in Nashville, Tennessee, are adopting their own safety restrictions. To reduce respiratory particles that could spread the virus, Giftery is asking shoppers to refrain from talking on cellphones.

“It is vital for us to stay open,” said William Smithson, the owner of Giftery, which generates about 35% of its annual sales from the holiday season.

At the same time, some high-end retailers are giving customers extra coddling. Neiman Marcus is letting shoppers book appointments to take virtual tours of its holiday trees and other decorations if they’re too fearful to enter a store. In doing so, the retailer hopes its customers will also get into the spirit of buying gifts.

“Business restrictions are increasing, and there will be some economic fallout from that,” said Jim O’Sullivan, an economist at TD Securities. But “even without authorities announcing new restrictions, individuals are likely to pull back from activity on their own.”

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