Jan 5, 2021
A recent article in The Globe and Mail looks at the impact that the COVID-19 pandemic has had on retailers as some stores have been required to close during the lockdowns and have been forced into restructuring or have decided to close down permanently. As well, “industry observers predict there could be more retail insolvencies to come in 2021,” according to author Susan Krashinsky Robertson.
“Never before have we found ourselves in a situation where the entire world was put on pause,” says Sandra Abitan, Managing Partner of Osler’s Montréal office, who specializes in retail insolvencies and restructuring. “A recession is a recession; this is a natural disaster.”
A number of retailers are hanging on thanks to government support in the form of wage subsidies and rent relief, Sandra tells The Globe and Mail. Additionally, some landlords have offered retailers rent concessions, while some lenders “recognize this may not be the right environment to try to make their money back through liquidations” — which is delaying some filings.
The article also notes that the “pandemic has accelerated trends that were already on the rise,” such as improving online service and closing underperforming stores. But investments are needed in order for retailers to make meaningful change and these changes are being required during a difficult time.
Sandra believes [this] year — with COVID-19 vaccines rolling out — will be the real test of who will be able to survive the post-pandemic era. “Who will have taken enough steps to be operationally more sound and have enough liquidity to secure their supply chain, and have this [digital] experience to offer their customer base?” she says. “The way people are shopping today — you can yell at Alexa to order your toilet paper — everything is changing. It’s an industry that is being transformed right now.”
If you subscribe to The Globe and Mail, you can learn more by reading Susan Krashinsky Robertson’s full article, “Retailers fight to outlast downturn as pandemic shutdowns clobber industry.”