Coronavirus freezes consumer-driven US economy, testing retailers

The coronavirus outbreak has transformed the US virtually overnight from a place of boundless consumerism to one suddenly constrained by nesting and social distancing.

The crisis tests all retailers, leading to temporary store closures at companies like Apple and Nike, manic buying of food staples at supermarkets and big-box stores like Walmart even as many stores remain open for business -- albeit in a weirdly anemic consumer environment.

In general, the coronavirus crisis is expected to dent retail earnings while likely accelerating a trend towards online sales as more stores shut down, hastening an industry shakeout that was already underway prior to the public health crisis.

"Weaker balance sheets and relentless margin pressures will continue to push smaller, cash-starved retailers down the ratings scale and closer to default," Mickey Chadha, a Moody's senior credit officer, said in a note to investors on Tuesday.

"This will be exacerbated with the extreme dislocations caused by the coronavirus pandemic. There is a sharpening divide between those who have the capacity to weather the challenging operating environment and those who do not."
"All parts of the economy and supply chain are vulnerable," said Neil Saunders, director GlobalData Retail. "That includes delivery companies and online orders."
"Demand across the economy is going to be down," he said, citing the sudden shock to the markets. "People aren't in the mood to spend money."
"We are serving our customers as usual, except where limited by government restrictions," a UPS spokesman said, adding the company "does not comment on the medical condition of its employees."