Coronavirus

Black Friday in July? Here's what retailers predict amid COVID-19 pandemic

ByLiz Kreutz KGO logo

Wednesday, May 20, 2020

Black Friday in July? Here's what retailers predict

You may have seen crazy online discounts from big-name stores amid the novel coronavirus pandemic. Even though this may sound great for shoppers, experts say the Black Friday-like sales signal 'detrimental' impacts to the retail industry,

SAN FRANCISCO (KGO) -- We've all seen it: The crazy online discounts from big-name retailers.

80% off Ann Taylor! 60% off J Crew! Macy's with their upcoming Memorial Day sales!

While it might sound nice, it signals something detrimental is happening to retail businesses. But just how bad is it?

"It's at a stand still," Joe Vernachio, the president of Richmond-based Mountain Hardwear, which sells outdoor clothing and gear, told ABC7 News. "The entire market place is giving discounts right now in order to incentivize the consumer and to allow the retailer and brands to move through inventory."

"Inside the industry, they talk about Black Friday in July," he explained.

New data released this week shows just how dire the situation is for retailers.

According to market research provider Euromonitor International, retail sales in the U.S. are projected to be down 6.5% in 2020. By comparison, retail sales were down just 2.2% in 2009 during the Great Recession.

In addition, data released by the federal government shows that retail sales in April were down 16.4% -- more than even was projected. Clothing sales specifically were down 78.8%.

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So, what's the trickle-down impact? Merchandise. Lots of it. And now retailers are desperately trying to get rid of inventory they haven't been able to sell.

"It's probably going to get even more heightened during the summertime," Vernachio predicted. "Summertime tends to be a slower time of consumption."

Despite curbside pick-up beginning this week in the Bay Area -- even at outdoor retailers like REI, which sells their products -- Vernachio says he isn't holding his breath.

"I don't see that changing anything significantly," he said. "I don't think consumers even understand what that means or why they would do that versus just buying it e-commerce and having it shipped to their house."

For Mountain Hardwear, this time of year is typically when people start buying camping and climbing gear, but that's mostly been put on hold. Although, not everything has been hard to sell.

"We've seen more and more people being out on the trails and being outside more than ever," Vernachio said. "Things like hiking pants are selling like crazy. But that doesn't mean that the consumer isn't expecting a discount, just because it is so prevalent."

And that leads to the most challenging aspect of all: How do you as a retailer plan for what's to come when none of us even know?

"How will people shop? Will they shop?" Vernachio asked. "There is no way anyone's guessing how much inventory they'll need. We'll either have too much or too little and it's yet to be seen."

Exhibit A for the unpredictable nature of current consumer behavior? They never would have guessed their number one selling item right now would be their most expensive down sleeping bag.

"We're not even sure what people are doing with five, six, seven hundred dollar down sleeping bags right now," he said, "But if they're camping in their backyard, they're very comfortable."

Despite the uncertainty of the times, Mountain Hardwear has been doing its part to give back.

The Columbia Sportswear-owned company has donated roughly $80,000 worth of clothing to first responders in the Bay Area and at coronavirus testing sites across the country.

Vernachio's message to consumers? Shop local.

"I think we're really going to treasure our local burrito shop and our local outdoor shop when we come out of this," he said. "There probably won't be as many as there were going into it, and we need to try to support them."

Oh, and if you're wondering: His prediction for ski season?

"If there's ever a sport that lends itself to participating with a mask on, it's probably skiing," he said, "So, we're encouraged that the resorts will create a protocol and that we're in a place that they can allow for the activity."

Here's to hoping!

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