March has been a challenging month for retail. What usually marks the end of the winter season has been hit hard by fears over the coronavirus. That has been good for some retailers -- especially discounters that sell food and other household needs -- but for others it's potentially devastating.
It's impossible to know exactly how hard the virus will hit, but its impact is already being felt. These three retailers will benefit from virus-related fears, and they will take business away from other chains because of how their operations have been engineered.
The online retailer may be March's big winner. If people leave the house less often and want to avoid gathering in public spaces, then it makes sense to shop at someplace that delivers.
Amazon (NASDAQ:AMZN) offers most household items -- think toilet paper, coffee, and hand sanitizer -- on a one-day delivery basis. It also offers grocery delivery in many markets from its Whole Foods stores. That means a Prime member can get pretty much anything they want without leaving home.
The warehouse club has already acknowledged that it has gotten a huge sales boost from virus-related buying. Some Costco (NASDAQ:COST) customers are stocking up on essentials out of fear, while others are taking a better-safe-than-sorry approach.
On some items, it's important to note that hoarding now will lead to fewer sales later. If you bay a palette of toilet paper, for example, it won't go bad.
Many of these sales, however, are Costco members buying things they might usually buy from other retailers. If you only eat one box of cereal a week, you don't need a multipack or a super-big box. If, however, you're planning to be stuck at home, buying in bigger quantities from the warehouse club makes sense.
Walmart (NYSE:WMT) has spent big money building out its curbside pickup capacity. That means that consumers can place a digital order and drive up to get it without having to leave their car. Clearly, that's an ideal setup for a world in which people are looking to stock up on supplies while avoiding crowds.
Sam's Club is almost certainly benefiting from the sales forces impacting Costco. It sells in bulk as well, and offers an easy way for members to buy large quantities of essentials (along with a few less essential things to help pass the time).
Winners will be rare
A public health crisis -- whether it actually makes a lot of people sick or not -- will be bad for most retailers. People are unlikely to buy things they don't need until the impact of the virus is fully known and the risk of infection passes. Most folks probably won't head to the mall, for example, and department stores will likely suffer greatly.
The coronavirus remains a major unknown, but uncertainty alone will create retail winners and losers. Chains that don't sell food and other essential items people will need if they're asked to not leave their house will probably be hit hard, and the ones that were already struggling may be put out of business.