Retail Industry Restructuring


The retail industry, particularly the U.S. retail industry, is in the midst of a restructuring of stunning magnitude. While the industry had been troubled for years, COVID-19 and the associated reactions to it has acted as a brutally effective accelerant of pre-existing trends. The result is that many retailers are finding to their dismay that their business models are untenable. Worse, their future holds little more than the promise of a grim existential struggle to craft a restructuring plan that is both attractive and credible to a group of stakeholders who are seeing core assumptions about their industry shaken every day.

Retail Apocalypse, Redux

Spare a moment to reflect on the cosmically bad luck of apparel retail and department store executives and investors in 2020. These segments have been challenged for years, but many observers had reason to believe that they had survived their industry’s extinction event, and that the worst was behind them. Not so.

Through September 30, 29 retailers had filed for bankruptcy. Those bankruptcy filings included nearly 6,000 announced store closures, leaving many stakeholders to nervously ponder whether or not any plausible restructuring scenario could yield a viable company at the end of the process. Interestingly, 15 major retailers that have not filed for bankruptcy are also pursuing major restructuring initiatives, and this group has announced 3,500 store closures. For some unlucky companies, there is simply no viable go-forward scenario.

Winners & Losers

All is not bleak in the retail industry. In fact, several segments are doing quite well. As Shelley Kohan at Robin Report observes: “The impact of Covid-19 can be broken into two major categories: essential and nonessential retailers.”

Essential retail segments:

  • Non-store (+ 27.0% YTD)
  • Home Improvement (+ 23.4% YTD)
  • Grocery (+ 10.5% YTD)
  • Discount Stores & Warehouse Clubs (+ 6.8% YTD)

Nonessential retail segments:

  • Department stores (- 8.2% YTD)
  • Apparel & Accessories (- 12.0% YTD)

2020 has not been a year in which strong, forward-looking retailers that were well positioned relative to existing trends were blindsided. Rather, it has been a year in which all retailers (along with the rest of us) were blindsided, but those operating on a firm foundation of financial strength, IT infrastructure, and operational capability have been able to quickly recover and increase the gap between themselves and the also-rans.

The challenge for apparel retailers, department stores and assorted also-rans is to craft value propositions that resonate with consumers at a time of change, and aggressively rethink long-held assumptions.


A study of history provides numerous examples of turning points that became clear only in retrospect. The benefit of such study is that it lends the student insight into broader trends and themes that may be obscured in the moment. But the weakness of a historical perspective is that it does too much to clear the fog obscuring those trends, offering a level of retrospective clarity that is impossible to achieve in the moment.

With the clarity of hindsight it is now clear that only wishful thinking and an inability to be sufficiently pessimistic in scenario planning allowed participants in and observers of the retail industry to believe that the major restructuring of the industry was in the rearview mirror as 2020 dawned. But that clarity was hard-won, and we can concede that while the particular scenario we are living through today was foreseeable to some, it certainly did seem wildly implausible in the not-too-distant past.

For the retail industry at large, and the apparel and department store segments in particular, COVID-19 was not a precision guided missile aimed at the heart of an otherwise healthy sector. Rather, the global pandemic was more akin to the final stone that crushed the life out of Giles Corey. Pre-COVID, apparel retail in the U.S. had serious challenges, and more restructuring was needed to put the industry on solid footing. The pandemic has simply made the unsustainable nature of the status quo clear to all.

About the Author

David Johnson (@TurnaroundDavid) is Founder and Managing Partner of Abraxas Group, a boutique advisory firm focused on providing transformational leadership to middle market companies in transition.  Over the course of his career David has served as financial advisor and interim executive to dozens of middle market companies.  David is also a recognized thought leader on the topics of business transformation, change management, interim leadership, restructuring, turnaround, and value creation.  He can be contacted at: