Are retailers ready for the coronavirus?
The Centers for Disease Control and Prevention issued an update earlier this week on the spread of the coronavirus, known as 2019-nCoV, from Wuhan, China to the U.S. and other countries.
To date, five patients in the U.S. have tested positive for the virus, while 32 were negative and 73 others are still awaiting confirmation. States with confirmed cases of the virus include Arizona, California, Illinois and Washington. People infected with the virus have symptoms including fever, cough and shortness of breath. Symptoms may appear anywhere from two to 14 days after exposure.
In China, the number of people infected with the virus is now listed at more than 6,000. Of those, 132 have died.
Concerns about a global outbreak of the virus have been blamed for turmoil in financial markets in recent days. The Dow Jones industrial average fell 267 points in trading on Monday.
American businesses have begun restricting travel to China and arranged charter flights to bring U.S. citizens home.
U.S. companies operating stores in China are taking steps to address the virus. Starbucks has temporarily closed more than 2,000 of its locations. The coffee giant has cautioned that the coronavirus outbreak in China could “materially affect” its results this year.
Apple is another company with a sizable footprint in China, including factories and retail.
“We’ve currently closed one of our retail stores and a number of channel partners have also closed their storefronts,” said Apple CEO Tim Cook on the company’s first-quarter earnings call yesterday. “Many of the stores that remain opened have also reduced operating hours. We’re taking additional precautions and frequently deep-cleaning our stores as well as conducting temperature checks for employees.”
The CDC has offered preventative actions to help reduce the spread of the coronavirus and other viruses. Number one on the list is for people to wash their hands with soap and water for at least 20 seconds. If soap and water are not available, the agency recommends alcohol-based sanitizers. Cleaning and disinfecting frequently touched surfaces is also recommended by the CDC.
Based on past experience with viral outbreaks, retailers can expect higher demand for soaps, sanitizers and household cleaning supplies.
In a note to clients, Evercore ISI analyst Omar Saad said L Brands, which operates Bath & Body Works, stood to benefit from concerns about the virus. Mr. Saad said the retailer could see a lift in same-store sales between two and four percent as concerned consumers buy more soap and sanitizers. He pointed to the uptick the company saw in sales during the 2009 outbreak of the H1N1 swine flu as analogous to the current situation.
- 2019 Novel Coronavirus (2019-nCoV) in the U.S. – Centers for Disease Control and Prevention
- About 2019 Novel Coronavirus (2019-nCoV) – Centers for Disease Control and Prevention
- Prevention & Treatment – Centers for Disease Control and Prevention
- Deaths rise to 132 in China outbreak as foreigners leave – The Associated Press/MSN
- Apple Inc. (AAPL) CEO Tim Cook on Q1 2020 Results (Earnings Call Transcript) – Seeking Alpha
- Starbucks outpaces earnings estimates but warns coronavirus could hit fiscal 2020 – CNBC
- Bath & Body Works’ owner could see sales of hand sanitizer and soap rise as deadly coronavirus spreads – CNBC
DISCUSSION QUESTIONS: What would you say is the current state of readiness among American retailers and restaurant operators for an outbreak of the coronavirus or other easily spread viruses? What steps should retailers be taking now to address the situation?