The Virus & The Damage Done

Neiman Marcus is the first, but it certainly won't be the last major retailer to file for bankruptcy in the face of the COVID-19 pandemic. Coronavirus has only compressed the timeline when it comes to the demise of traditional retail channels. The warning signs have flashed for decades, but department store executives turned a blind eye. Years ago, then Estée Lauder Chairman and CEO Leonard Lauder warned retailers that their tired marketing plans, dated layouts and chintzy merchandise would be the death of department stores. He was right of course; but Lauder's prognostications have been realized much earlier than he could have imagined.

Neiman Marcus Inc. will apply for bankruptcy protection as early as Wednesday, with plans to restructure its debt with an eye toward reopening most stores after the pandemic crisis eases, according to an article on MarketWatch. Options include selling the business or closing some of Neiman Marcus' 43 department stores. Last week, the retailer failed make interest payments on $4.7 billion in debt.

The company will have plenty of company. Analysts predict taht 100,000 stores will close by 2025, led by apparel retailers which, just a few short years ago, were the primary retail channel for prestige beauty brands like Lauder and Lancôme.

The obvious winners in this brave new world of retail are e-commerce sites; analysts expect online shops capture 25% of the market by 2025.