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This Department Store Is Already Cutting Hours Due to COVID: Will More Have to Follow Suit?

By Maurie Backman – Jan 6, 2022 at 4:36AM

Key Points

  • Macy's recently announced shortened hours for the month of January.
  • As COVID-19 infections and exposures take out chunks of the workforce, other retailers could land in a similar boat.
  • If retailers see their revenue decline steeply due to reduced hours, it could lead to an uptick in store closures.

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The COVID-19 outbreak is surging again, and it could spell trouble for retailers.

The pandemic has challenged department stores in many ways. Since these stores are often located in enclosed shopping malls, they became less appealing to consumers when the COVID-19 outbreak was truly raging and vaccines weren't yet available to offer protection. And while some department stores have ramped up their shipping and distribution game to stay competitive, those efforts tend to pale in comparison to the options made possible by big-box retailers.

Of course, the survival of malls hinges on the success and stability of department stores. That's because these stores commonly serve as anchor tenants, drawing in customers and helping mall operators secure other leases.

But now, department stores are facing a new challenge: staffing issues due to the COVID-19 outbreak. And one major chain is already being forced to scale back its operating hours to deal with the problem at hand.

A masked cashier hands a shopping bag to a masked person standing next to another masked person.

Image source: Getty Images.

Macy's hours are shrinking

Macy's (M 3.00%) recently announced that it will be cutting its hours for the rest of January. And while the retailer didn't state explicitly whether it's seeing more of its workers testing positive for COVID-19, it's conceivable that Macy's, as well as other major stores, is experiencing staffing shortages due to the state of the outbreak.

On Jan. 3, the U.S. reported a whopping 1 million new COVID-19 infections. And given the highly transmissible nature of the omicron variant, we could be in for a very disruptive month in that regard. And so there's a good chance that Macy's won't be the only major retailer to announce changes to its operating hours during the early part of the year.

Of course, all of this is coming at a time when the retail industry has been starved for labor. Workers have been quitting their jobs in droves for months, and in November, a record 4.5 million Americans resigned. With COVID-19 cases soaring, retailers that were already experiencing labor challenges may have no choice but to slash their hours due to a lack of staff.

If that were to happen, it could have a serious impact on revenue. And that could, in turn, lead to store closures -- not immediately, but over time. For malls, that's nothing short of a nightmare.

Malls have already lost a number of key tenants in the course of the pandemic. And if department stores and big names start shuttering locations, it could deal a blow to real estate investors with mall properties in their portfolios, or those who own mall REITs (real estate investment trusts).

Now one silver lining for Macy's is that so far, the retailer thinks it will be able to keep its weekend hours intact. That's crucial, since most in-person sales tend to occur then.

But Macy's may need to implement further scheduling changes if staff members start getting sick. And it's far from the only major retailer in that boat. That's something real estate investors will need to keep in mind as we navigate this explosive stage of the pandemic.

Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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