With hundreds of thousands of stores closed nationwide, the coronavirus pandemic is accelerating dramatic changes across the retail industry that had been underway well before the viral outbreak hit the U.S., according to analysts.
"Retail has been on life support," said Ian Ross, principal of the commercial real estate investment firm Somera Road. "Dozens of these companies were on the verge of financial collapse, and I have a hard time believing they're not going to collapse because of this."
Over the last few weeks, dozens of retailers have announced furloughs. Macy's put the majority of its roughly 130,000 workers on furlough. Kohl's, JCPenney and Nordstrom temporarily closed all of their stores and put their workers on furlough, about 300,000 people.
Mall operators Simon Property Group, Westfield and Taubman Centers have announced temporary closures in response to state-mandated shutdowns of nonessential businesses.
Even digitally savvy companies have buckled. The online beauty shop Glossier closed its retail stores, Rent the Runway laid off all its retail employees and the fashion company Everlane laid off or furloughed about 200 of its workers.
"Nobody wants to cut people out of their company," said Allen Questrom, the former CEO of Macy's, Neiman Marcus, Barneys New York and JCPenney. "The key is to stay alive so the company can come back into business."
However, in a highly competitive business with slim margins, the impact of the virus is broadening the gap between which companies may be viable after the pandemic is contained and which may not survive, said Linda Tsai, a real estate investment trust, or REIT, analyst who covers retail with Jefferies Financial Group.
Companies that have gone through bankruptcy proceedings, such as Sears, are clearly on the shakiest ground, while stores in higher-income areas and retailers with low debt will likely bounce back faster from the impact of the virus and any potential recession, Tsai said.
Over the last few years, the retail industry has been rocked by a wave of bankruptcies as retailers rush to right-size their businesses. Most recently, Forever 21 and Barneys New York filed for bankruptcy, along with retail chains like Payless ShoeSource and Modell's Sporting Goods.
"Big companies with the ability to weather a storm like this can go on for a while without income and can come back strong," said James Cook, director of retail research for the commercial real estate service firm JLL. "A lot of retailers who have gone through private equity and mergers or acquisitions that have saddled them with a lot of debt can't coast for very long without some kind of restructuring."
Mall operators that house the retailers are also scrambling to preserve cash. The mall owner Macerich cut its dividend by 33 percent. Westfield cut its dividend in half. Weingarten, which operates open-air shopping centers with mainly grocery and essentials tenants, drew down a $482 million line of credit, citing an immediate need for liquidity.
"It may take time for damage to unfold," said Anna Lai, a REIT analyst with S&P Global Ratings.
Some mall operators and retailers had already been short on cash and high on debt before the pandemic hit, according to S&P Market Intelligence reports. Mall-based companies, including Belk, Neiman Marcus and J.Crew, are on the S&P's watch list for default, with triple-C credit ratings. That could create major challenges for malls after the virus is contained, according to the company.
"I think the malls will face near-term pressure, but longer term, they could face pressure to lower rent but also occupancy pressure if some of these retailers do not survive," Lai said.
At this moment of crisis, all options are on the table, said David French, senior vice president of government relations for the National Retail Federation. Retailers are discussing their lease terms with their landlords to find temporary relief on rent and are asking their lenders to ease their debts, he said.
The mall operator Taubman recently told its retail tenants that it expects all of its tenants to meet their lease obligations but that it is willing to discuss any financial challenges and help them with a type of payment plan.
"Liquidity is a massive issue, and there is no one silver bullet," French said. "If you're not making sales, you're running out of cash."
Download the NBC News app for full coverage and alerts about the coronavirus outbreak
The retail and shopping mall industries have joined the melee of hamstrung sectors to plead for financial relief from the Trump administration as it rolls out a $2 trillion stimulus program.
The National Retail Federation asked the administration in a letter last month to consider offering retailers government-backed loans and relief from certain tax obligations. The International Council of Shopping Centers, a trade association representing malls, including Simon Property and Kimco Realty, argued in a letter to the Trump administration last month that shopping malls could crumble without business interruption coverage for retailers, restaurants and landlords. The organization argues that without ensuring the stability of its tenant base's roughly $1 trillion in secured and unsecured debt, the shopping center industry will be at risk.
"One in 4 jobs are retail related," said Tom McGee, CEO of the International Council of Shopping Centers. "If you want to save the U.S. economy, you need to focus on the retail industry. It's foundational to the economy and foundational to the community."
As retailers resort to furloughs and close stores to manage costs, retail workers are left without incomes.
Nayeli, a former JCPenney employee in Santa Ana, California, who asked that her last name not be used, has been unemployed for about a month. She considered a job at Costco to continue to help her parents make rent and buy groceries, but her dad said he'd rather pick up extra shifts at his job manufacturing airplane parts than risk her being exposed to the coronavirus.
"I was concerned because I helped my parents with rent and groceries, and I was like, 'What am I going to do?'" she said. "Although JCPenney isn't doing well as a company, they should offer some sort of pay. Imagine people who just rely on that paycheck. How are they going to pay the bills, you know?"