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Retailers step up security and close stores

After rioters looted and damaged businesses in Long Beach, California National Guard soldiers stand watch June 1.
(Allen J. Schaben / Los Angeles Times)

U.S. retailers are stepping up patrols by armed security guards and transferring merchandise to secure locations as widespread civil unrest sets back the economic recovery from the coronavirus shutdown.

Businesses that were just beginning to reopen had to pull shutters back down after looters smashed storefronts across the country and stole mobile phones, jewelry, clothing, computers and even furniture. Some stores, including a Target in Minneapolis, are so badly damaged they will need to be rebuilt.

High-end shopping districts in New York, Philadelphia and Los Angeles as well as suburban malls from Arizona to Florida have been targeted by a small minority of troublemakers during the largely peaceful protests.

Matthew Shay, chief executive of the National Retail Federation, said communities were right to express their anger at the death of George Floyd, an unarmed black man, while in police custody.

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But he added: “Defacing, looting and plundering businesses, whether viewed as a direct outgrowth of fury or an opportunistic act of vandalism and theft, impedes progress and healing.”

Several of the country’s largest retail chains have closed stores in response. They include Adidas, which shut all 230 of its U.S. stores until further notice; CVS Pharmacy, which closed about 60; and Target, which closed or reduced hours at more than 200.

Retailers were hiring more security services, including ex-military personnel and police as guards, some of whom carried weapons, said Robert Dodge, president of corporate risk services at G4S, the world’s biggest security company by revenue. “They’re there to mitigate the risk, and hopefully deter people from trying to break in,” he said. “If you call the police, they may or may not be there. They are extremely distracted right now.”

More companies were requesting early-warning intelligence about the threats, and shifting stock — especially high-value items — away from vulnerable locations. G4S was also recommending that retailers remove or secure garbage cans and other objects outside stores that could be used as projectiles, and review evacuation procedures.

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The costs of such disruption would usually be bearable for the sector, but nonessential chains are already reeling from weeks of forced store closures that have caused the biggest drop in U.S. retail sales on record and tipped companies including JCPenney, Neiman Marcus and J Crew into bankruptcy and led to millions of job losses.

“They were at least on the trajectory of trying to clear excess inventory, particularly in apparel,” said Neil Saunders, managing director and retail analyst at GlobalData Retail. “This is really quite devastating.”

The unrest is also affecting e-commerce operations, which have given much-needed support to the retail industry during the pandemic.

Amazon said it had adjusted routes and scaled back its operations in a “handful” of cities. Footage on social media showed an Amazon-branded delivery van being looted in Santa Monica. The company confirmed the incident and said the driver was safe.

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FedEx said some of its vehicles and facilities had been vandalized, while the U.S. Postal Service and UPS have also been affected.

After a seventh consecutive night of protests, the big worry for retailers, as for the country, is that they are just the start of a summer of discontent. “There are a lot of people on edge,” said Dodge, noting that the disobedience came against a backdrop of high unemployment and wider tensions.

Several retail chiefs expressed sympathy with the demonstrators.

“The horrible killings and racist actions serve as a sickening reminder of what too many people live through every day in America,” wrote John Donahoe, chief executive of Nike, whose commitment to diversity is a central part of its brand identity.

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“We can replace our windows and handbags,” wrote Jide Zeitlin, chief executive of luxury group Tapestry, owner of Coach and Kate Spade, in a memo to staff. “But we cannot bring back George Floyd.”

Additional reporting by Dave Lee

© The Financial Times Ltd. 2020. All rights reserved. FT and Financial Times are trademarks of the Financial Times Ltd. Not to be redistributed, copied or modified in any way.


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