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Coronavirus epidemic: U.S. retailers could see some empty shelves by mid-April

Production bottlenecks could cause some bare shelves at brick-and-mortar retailers within 60 to 90 days, retail analysts warn.
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Coronavirus has the potential to become a global pandemic, temporarily emptying retail store shelves in the coming months and depressing some consumer-facing businesses, experts say, with government officials advising families to take measured steps to stock up on certain essentials.

A pandemic is the rapid spread of an infectious disease to a large amount of people in a short period of time across international boundaries.

Ahead of any pandemic, the Department of Homeland Security says families should check their prescription drug supplies, store two-week supplies of water and food and have non-prescription drugs and health supplies on hand, including pain relievers, cough and cold medicines and fluids with electrolytes.

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The Centers for Disease Control and Prevention does not recommend that consumers buy masks, saying they should instead focus on regular hand-washing. The only people who would benefit from masks are those exhibiting symptoms, to help prevent them from transmitting the virus, and front-line health care workers.

Panicked hoarding could create shortages of otherwise sustainable supplies in a self-fulfilling "run on the bank" scenario. In one Italian town, videos showed panicked shoppers trading blows and stripping shelves of pasta and other staples.

Businesses that involve bringing together people in public stand to see a temporary dip in their revenues.

"Declining consumer confidence, potentially severe retail-traffic declines, and temporary store closures are evolving risk factors that depend on uncertain variables like the geographic spread of the virus and the timing of containment/eradication solutions," analysts at the financial services company Cowen Inc. warned in a note this week.

IMAX has reduced operations by one-third because of a closing of screens in China, MarketWatch reported.

Retailers expressed confidence that the coronavirus impact won't throw the economy off balance in the long term.

"There are always wild cards we cannot control, like coronavirus and a politically charged election year. But when it comes to the fundamentals, our economy is sound and consumers continue to lead the way," Matthew Shay, CEO of the National Retail Federation, a trade organization, said in a statement Wednesday.

Thanks to companies' stocking up to get ahead of potential tariffs and the Chinese New Year, inventories are in good shape, Wells Fargo analyst Edward Kelly wrote in a note, with spring and early summer product already having been shipped.

But global supply chains running on lean inventories could be vulnerable to disruptions as suppliers are cut off from markets or can't access critical components or essential ingredients.

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If production isn't restarted soon, the bottlenecks could lead to some bare shelves at brick-and-mortar retailers by mid-April, with stores such as Target and Walmart at the greatest risk, Kelly wrote.

Supply chain disruptions and shortages have the potential to hit retailers such as Best Buy, Michaels and Wayfair in the near future, considering that 60 percent to 70 percent of their inventory comes from China.

Even Costco, BJ's Wholesale Club and Kroger could see issues because of China's role in packaging materials and basic paper products.

Retailers have started to look to shift production from China to other parts of Asia, but they are hitting snags because many raw materials come from China.