Subscribe to How To Reopen, our weekly newsletter that tells you how to start your business in the midst of a pandemic.
Apple's decision on Friday to close stores in four states with increasing coronavirus cases raises a question that other companies may soon be facing: staying open or preparing for further downtime?
Apple, like many other major U.S. retailers, closed all U.S. locations in March. It announced on Friday that it would close eleven stores, six in Arizona, two in Florida, two in North Carolina, and one in South Carolina, which it had only reopened a few weeks ago.
The move increases concern that the pandemic may keep the economy in doldrums longer than expected. These concerns drove Wall Street stocks down. It is not clear if other retailers will follow in bulk, though an analyst expects badly affected stores to remain open unless they have to be closed by local authorities.
Many other companies, including manufacturing, travel, hospitality and entertainment, have steadily reopened wherever they can while taking health precautions. But some have recently withdrawn or stopped their plans. For example, the Cruise Lines International Association announced on Friday that ships will not be leaving US ports until September 15, extending a pause posed by the coronavirus pandemic.
In the auto industry, efforts to resume production have been partially hampered by infected workers.
Since the U.S. efforts to curb the pandemic have not been particularly successful, the situation could "ultimately lead to a need for longer standstills," which would cut consumer spending and cost jobs, said Eric Rosengren, president of the Federal Reserve Bank of Boston. In public statements on Friday, Rosengren said he expected the economic recovery to be less this year than initially expected at the start of the pandemic and that the unemployment rate would remain in double digits.
States like Utah and Oregon are pausing to reopen their economies in the midst of a surge, while others like Texas and Arizona have not changed their plans. Arizona has mandated companies to implement social distancing this week, and Phoenix has made masks mandatory in public.
Like many of the largest companies in the technology industry, Apple has done much better in a pandemic-driven recession than most companies. According to Daniel Ives of Wedbush Securities, the closings will not significantly affect Apple's sales, but they are "a worrying trend."
The Californian company in Cupertino has continued to sell iPhones and other products online, and other retailers can do so if they choose to close, said Craig Johnson, president of Customer Growth Partners, a retail consultancy.
"I don't think this will be a huge stumbling block for Apple or anyone else. You can still get almost anything you need online," he said.
Johnson found that the country's largest retailers, Walmart and Target, were not being closed, and chain stores like Home Depot and Lowe’s were not. If other chains that are not considered essential are closing deals, he would expect the closures to be limited to areas with increasing cases.
However, retailers were hit hard with falling profits and bankruptcies. Retail earnings declined 70% in the first quarter excluding Walmart, said Ken Perkins of Retail Metrics, and earnings in the second quarter are expected to decrease another 45%. The department stores Neiman Marcus and J.C. Penny as well as the clothing chain J. Crew have applied for bankruptcy protection. Household goods chain Pier 1 is closed.
"Staying open can be existential for some retailers, and I would expect them to stay open if local regulations allow," Perkins said in an email. He expected that they would offer roadside pickup "to a minimum" even if the doors were closed in certain areas where they were required to do so.
Disney, which plans to reopen Disneyland in California and Disney World in Orlando, Florida in July, is not changing its plans. Universal Orlando, Busch Gardens Tampa Bay and SeaWorld have already reopened in Florida. Cases are also increasing in Florida, with some restaurants and bars reporting that they have temporarily closed.
Cinema chains are also reopening. Cinemark starts this week in Dallas and goes nationwide in July. Regal and AMC will also reopen in July – with mask requirements for employees and customers.
The Navajo Nation's gambling operation had hoped to reopen their Arizona and New Mexico casinos in mid-June, but they will remain closed until the beginning of July due to the outbreak. Other casinos have temporarily closed.
More Corona virus coverage from capital::
- Square's head of lending believes the PPP needs further changes to help the smallest businesses
- This week, 5 economic data investors are watching
- George Floyd protests that coronavirus face masks face challenges
- A new coating could protect ATMs from the spread of diseases like COVID-19. But will it work?
- How Beijing's second wave of coronavirus triggered a salmon boycott