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Association says stores planing for virus epidemic, analysts not so sure

Updated March 5, 2020 - 6:23 pm

The Retail Association of Nevada tried to settle coronavirus-related anxiety in the retail industry Thursday, announcing Nevada retailers have plans in place to deal with COVID-19.

The association said in a Thursday media call it has yet to hear of any retailers facing significant warehouse shortages.

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“There will be products on the shelves,” Bryan Wachter, senior vice president of the association, said. “We’re anticipating that any of these kind of temporary shortages are really the result of a very quick demand increase, but we’re not seeing shortages at say warehouses or in the supply chain. So, it might be a type where your store might be out of it … but we expect all those supplies to be replenished.”

Wachter said 80 percent of retailers polled by the National Retail Federation have plans in place to deal with an epidemic, including COVID-19. But only 77 retailers nationally participated in the survey, he said after being asked to provide the report’s methodology.

James Dion, founder of Chicago-based consulting firm Dionco Inc., said most retailers have “zero plans.”

“Maybe Walmart and Target, but few beyond that,” he said. “Lack of supply will drive the recession.”

Forrester analyst Sucharita Kodali said the number of respondents polled by the National Retail Federation is sufficient but what’s surprising is the percentage that reported they were prepared, noting that the spread of coronavirus in the U.S. was unforseen and many retailers were unprepared.

“Time will tell. If sales go down substantially, we will question the true preparedness of these retailers,” she said. “I think for a lot of retailers, their definition of preparedness is putting hand sanitizer at entrances, maybe it’s wiping down door handles. I don’t think most have a Plan B for delayed inventory shipments.”

NRF’s global port tracker reported U.S. retailers were expected to see a “sharper-than-usual” drop last month in the number of imports from China citing shutdowns of factories over coronavirus concerns.

While retailers were already shifting their sourcing from China to other countries last year because of the trade war, Kodali said the change coupled with the coronavirus is compounding the negative impact for retailers.

“It’s just a shock to supply that they can’t control, and it takes too long to move your supply chain to another country so you are stuck with what you have or what you can get — which is very limited now,” she said.

A number of major retailers reported their quarterly earnings this week and nearly all have discussed the coronavirus’ impact on business and what plans are in place.

Kroger Chairman and Chief Executive Rodney McMullen said Thursday during its earnigns call it has “established an internal task force that has activated our pandemic preparedness plan with a focus on our customers, associates and supply chain.”

Kroger subsidiary Smith’s operates 50 locations in the state, according to their website.

He noted it’s too early to see any financial impact from the coronavirus though it would expect to see increased sales on basic items such as hand sanitizer, hand soap and canned goods.

The grocery chain recently began limiting purchases of items related to the coronavirus.

Contact Subrina Hudson at shudson@reviewjournal.com or 702-383-0340. Follow @SubrinaH on Twitter.

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