Retail winners and losers in the wake of COVID-19

Department stores on the ropes, while online grocery sales climb
Department stores on the ropes, while online ... 04:45

For weeks they've been fields of desolation.  But, slowly, mall parking lots are starting to come back to life. 

Malls started reopening on Friday in Texas and some Southern states. Others are offering curbside pickup, like at Stonebriar Centre outside Dallas, Texas.

Participating retailers and restaurants at the Stonebriar Centre mall in Frisco, Texas, offer curbside pickup.  CBS News

"It's uncharted territory for us," said Stephanie Brager, a senior vice president at Brookfield Properties, which manages 170 malls across the country, including Stonebriar. "Our research actually indicates that 70% of people are looking forward to shopping in person again."

But as it struggles to reopen amid the deepest recession since the Great Depression, the retail industry is facing a new reality.

"Biologically, a virus is meant to, or usually, goes through and culls the herd," said Scott Galloway, a professor of marketing at New York University. "And we're having the same thing economically. We're having a culling of the herd, and that is strong retailers are going to probably emerge from it stronger. There's more foliage for a fewer number of elephants."

That means the biggest names in retail are reaping the greatest benefits, from those who spend their $1,200 government checks, to everyone buying everything possible online right now.

Galloway said, "If you think about the stimulus, you could argue it's the Amazon and Walmart Shareholder Act, because not only did we put a lot of stimulus in the hands of consumers who spend a disproportionate amount of their consumer dollars at an Amazon or a Walmart and need those basic essentials, but they also had an opportunity to see 98% of their competitors closed."

As they've deserted the streets and sheltered at home, Americans have changed their everyday shopping habits, perhaps permanently. Online grocery sales are way up.

CBS News business analyst Jill Schlesinger asked, "Is this a growth area for the Stop and Shops and the Krogers of the world?"

"Oh, 100%," Galloway replied. "So, you could see just in this last 90 days that we're going to take somewhere between $70-100 billion in U.S. grocery commerce, and move it from the store to online."

No part of the retail industry has suffered more than department stores. 

An empty parking lot at the Short Hills Mall in New Jersey.  CBS News

When they first appeared more than 150 years ago, they were feared as much as loved. "Consumers really liked it, but who did not like it was the little stores that were being gobbled up," said Jan Whitaker, who has written about the history of department stores. "The key thing to realize is that these department stores in the 19th century, especially toward the end of it when there were many more of them, they were the disruptors of their day every bit as much as Amazon [is today]."

Whitaker said the disruptors may be about to become the disrupted. "The department store has been in decline for a very long time," she said.

Neiman Marcus and JC Penney are on the verge of bankruptcy. Others have furloughed hundreds of thousands of workers, and seen their credit downgraded.

Galloway said, "COVID-19 is really more of an accelerant than it is a change agent, and that is, the future's just happening, playing out the same way; it's just being pulled forward faster, and department stores are likely the walking dead.

"They were in the seventh inning of their life. Now, they are officially in the bottom of the ninth, if you will, especially retail apparel."

How will the pandemic affect consumer confide... 01:24

At Brookfield Properties, they're still committed to department stores, but maybe hedging their bets a little.

Schlesinger asked, "Many of us who walk into a mall are used to an anchor store, one big department store that's on either side, or maybe two different sides. Is that still the case today? And if not, what replaces it?"

"Our department stores are still valuable partners for us," Brager said. "It varies according to market. We have properties where we are replacing department stores with grocers, sporting goods stores, healthcare facilities. But then we also opened a new property in Connecticut last year with two department stores."

By tomorrow, at least 50 malls, and 68 Macys, are expected to reopen across the country.  The question for retailers is: If they open, will we come?

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Story produced by Alan Golds. Editor: Emanuele Secci. 

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