Which retailers are less vulnerable to the coronavirus and whatever comes next?
Last week on his company’s fourth-quarter conference call, Todd Vasos, CEO at Dollar General, said he expects his chain’s proximity to consumers to be beneficial should calls for social distancing continue amid the coronavirus outbreak.
The retailer’s stores are within five to seven miles of over 75 percent of U.S. households.
“The most important thing here is that we’re a small box shop close to your home,” said Mr. Vasos. “I think in times like this, where people are probably less apt of travel, we believe that we’ll get our fair share of that consumer base, because they just don’t want to travel to the big box or don’t want to travel great distances.”
Asked about the impact of a potential downturn, Mr. Vasos expects Dollar General to benefit similarly to 2008’s Great Recession as consumers traded down. “The great thing about that is, maybe she visited us back in ’08 and ’09 and some obviously may not have come back,” said Mr. Vasos. “When she comes back, she is going to see a completely different box that’s even more enhanced then she saw before. So, we will watch it carefully, but we think we’re well-positioned as we move forward here.”
E-commerce overall is expected to benefit as consumers avoid crowded places. Wells Fargo, as per a note on March 11, is among those not believing the online gains would offset reports of double-digit declines in-store traffic.
“COVID-19 and initial plans for its containment present some clear downside risks to the consumer spending outlook, but it would be premature to expect consumer spending to crater. Many categories of spending are resilient, even in the most uncertain times,” Wells Fargo analysts wrote in the note, according to Retail Dive.
Sellers of staple products are expected to see more demand than those selling non-discretionary items, should the economy weaken or head into a recession. At a press conference Friday detailing the federal government’s response that included top retail company executives, Brian Cornell, Target’s CEO, vowed the chain will remain open “to serve the American consumer who’s rapidly stocking up on household essentials.”
- Dollar General Corporation Reports Strong Fourth Quarter 2019 Financial Results- Dollar General
- Dollar General Corporation (DG) Q4 2019 Earnings Call Transcript – The Motley Fool
- Dollar Store Investors See Green in a Sea of Red This Week – Bloomberg
- Coronavirus is hurting store traffic and e-commerce won’t help much, analysts say – Retail Dive
- Why Dollar General thinks coronavirus will help business – Fortune
- Retailer leaders issue statement on responsible shopping during COVID-19 pandemic – National Retail Federation
- Leading Retailers Step Up To Partner On Covid-19 Testing – Retail Industry Leaders Association
DISCUSSION QUESTIONS: Which retail channel and retailers appear best positioned to withstand the impact of the coronavirus outbreak? What do you think is the likelihood that the coronavirus outbreak and other factors will push the U.S. economy into a recession in the coming months?