In case you didn’t know, Coronavirus is widespread right now and is causing activities to cease worldwide. According to the Centers For Disease Control and Prevention (CDC), the current strain of coronavirus is infecting people in more than 15 countries, particularly in China and parts of Asia. In China, many manufacturers have shut down due to the high number of infections and the likelihood of the disease spreading.
In the United States, the CDC says more cases will pop up, making it urgent that people take precautions to protect themselves. In addition, economists are predicting financial impacts too, as retailers are expecting products and international travelers to arrive from China.
How much do we import from China?
Statista estimates the value of goods imported from China in 2019 was about $452 billion. In addition, the U.S. welcomed over two million Chinese tourists in 2018.
How does this all matter to the world of retail? This issue is twofold because we (retailers) import many of our low-cost retail products from China. Also, we rely on the millions of Chinese consumers who shop for luxury brands to purchase them, not only in the U.S. but in all the major shopping capitals around the world such as Milan and Paris.
In a recent article, Wall Street Journal reporter Eric Sylvers wrote, “Globally, Chinese consumers last year bought nearly $110 billion worth of luxury goods, including clothes, leather goods and jewelry—mostly outside China.” Furthermore, experts say the U.S. could potentially lose $10.3 billion in Chinese visitor spending due to the outbreak. Women's’ Wear Daily, the leading retail news outlet, reports Burberry is delaying their fashion show due to the virus and PVH Inc., which owns brands such as Calvin Klein and Tommy Hilfiger, have shut down during this time in areas where the virus is problematic.
What kind of impact can retailers expect?
Brands such as Burberry, Michael Kors, and Kate Spade are already feeling the impact and there’s no telling how long this virus will last or how much this will impact retail sales over the first quarter of 2020.
The National Retail Federation says it is monitoring the virus closely, saying there is a possibility supply chain impacts from ports to consumers. February is typically considered a slow month due to Chinese New Year celebrations, but NRF states retailers could see “sharper-than-usual” drops due to the outbreak of the virus. If factories stay closed due to the outbreak, retailers will be forced to address potential supply chain issues for a variety of products in the coming months.
Recently, USA Today reported that American airlines will halt some flights between the United States and China for the next several weeks. These flights include freight from China on FedX and UPS. While the products that you purchase may seem to be in high supply today, the effects of the virus will be felt over the upcoming months, specifically in the back-to-school shopping season, which begins in July.
How can shoppers get ahead?
My advice is to plan ahead this retail season. Don’t wait till the last minute to purchase goods. Potentially, this outbreak could affect retailers in the furniture industry, as well. Be aware there may be delays in getting orders here to the U.S. This is important, especially this time of year when many Americans are waiting for their tax returns to make major home purchases.
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