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Illustration: Eniola Odetunde/Axios

Retailers on the brink are counting on what's possibly the most uncertain holiday season ever for a last shot at survival.

Why it matters: Giants like Amazon and Walmart (plus those that have benefited from work-from-home needs) are thriving. For others, the all-important shopping season is unfolding against the bleakest backdrop for the industry in years.

The backstory: The pandemic — and the economic cratering that accompanied it —intensified a long, slow industry decline that’s been underway for the past decade.

  • The sector is on pace to top the worst year for retail bankruptcies on record: 2010, when the industry saw a post-financial crisis shakeout.
  • Some (like department store chain Century 21) recently filed for bankruptcy and plan to shutter stores — they couldn't hold out for what's typically the most lucrative part of the year.
  • Retailers have shuttered more stores this year than ever before, according to data from BDO, cited by the Wall Street Journal.

The retailers still treading water are coming up on what's always been their most crucial season — and there's no guarantee it will deliver.

  • In normal times, about 20% of all retail sales in the U.S. come from the holiday shopping season, according to the National Retail Federation.
  • Retailers get a big chunk of annual profit in the final quarter of the year. In the case of Macy's, that number was as high as 58% in 2018, per S&P data.
  • Adding to the tension: While 55% of shoppers plan to spend more or the same as they spent last year, a sizable chunk — 40% — plans to spend less, according to a PwC survey.

What they’re saying: This holiday season is struggling retailers' "last effort to be relevant for the consumer and to prove their reason for existence," Sarah Wyeth, a retail analyst at credit rating agency S&P Global, tells Axios.

  • On the watchlist: Guitar Center, women's retailer J.Jill, and Party City are most at risk of not being able to pay off debt, according to Moody's.

What's at stake: Struggling chains may not be able to make critical investments to stand out against better-capitalized competitors.

  • They may not be able to buy up inventory or buff up e-commerce systems to offer the things that have become even more popular since the pandemic hit, like home delivery or curbside pickup, Wyeth says.

Yes, but: The retailers that wiped out debts in bankruptcy court since filing at the onset of the pandemic could have more runway to spend.

What to watch: “There will be more challenges for retailers as the employment picture seems to be softening,” James Knightley, an economist at ING, said in a research note this week.

  • One glimmer of hope: Online and in-store spending has already eclipsed the pre-pandemic level — a rare “V-shaped” recovery.
  • But that measure is broad and includes spending at restaurants and auto shops, so it's unclear whether the struggling retailers will snap up consumer dollars in the coming months.

The bottom line, as business turnaround adviser David Berliner told Forbes: “A lot of on-the-edge retailers are saying, 'Let’s get one more holiday season under our belt. Maybe we can get a good holiday somehow.'"

Go deeper

Ina Fried, author of Login
Oct 29, 2020 - Economy & Business

Earnings reports to show if tech can keep growing in a pandemic

Illustration: Eniola Odetunde/Axios

Apple, Facebook, Google and Amazon are all slated to report earnings after the markets close today, and that should give us a much better sense of how the tech industry is faring through the pandemic.

Why it matters: The reports should offer a clue of how sustainable tech's "new normal" is. That's especially important given that experts predict another and stronger wave of coronavirus in the U.S. that could force continued reliance on remote work for office employees.

2 hours ago - Health

Ipsos poll: COVID trick-or-treat

Data: Axios/Ipsos poll; Note ±3.3% margin of error for the total sample size; Chart: Andrew Witherspoon/Axios

About half of Americans are worried that trick-or-treating will spread coronavirus in their communities, according to this week's installment of the Axios/Ipsos Coronavirus Index.

Why it matters: This may seem like more evidence that the pandemic is curbing our nation's cherished pastimes. But a closer look reveals something more nuanced about Americans' increased acceptance for risk around activities in which they want to participate.

Updated 10 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Health: The good and bad news about antibody therapies — Fauci: Hotspots have materialized across "the entire country."
  2. World: Belgium imposes lockdown, citing "health emergency" due to influx of cases.
  3. Economy: Conference Board predicts economy won’t fully recover until late 2021.
  4. Education: Surge threatens to shut classrooms down again.
  5. Technology: The pandemic isn't slowing tech.
  6. Travel: CDC replaces COVID-19 cruise ban with less restrictive "conditional sailing order."
  7. Sports: High school football's pandemic struggles.
  8. 🎧Podcast: The vaccine race turns toward nationalism.