The Resilience of Fashion Retail Stores

Abstract

Retail stores are an essential sales channel in the economy. What makes them resilient to external shocks? We propose a conceptual framework in which resilience is determined by (a) the intrinsic stability of the customer pool that the store serves and (b) the actions the store implements to cope with external shocks. We apply our framework to study the impact of COVID-19 pandemic on thousands of fashion stores across the world, using a novel high-frequency scraping method to infer daily sales. Our results indicate a severe impact of lockdown regulations, with  remarkable store-level heterogeneity. Stores of smaller size, in high-income lower-density areas, catering to non-touristic demand and not located in shopping malls were intrinsically more resistant to the pandemic. Furthermore, stores that chose to be more differentiated (reduced assortment similarity) and to keep a fresher inventory (reduced inventory days) were also able to attenuate the impact of COVID-19. Our framework can be useful for policymakers, who are interested in identifying and targeting most vulnerable businesses, as well as managers, who would like to build a network  of stores sufficiently resistant to shocks.

Keywords: Fast-Fashion, Offline Stores, COVID-19, Lockdowns, Retail

JEL Classification: C8, D12, D22, L81, R3