EXPRESS: The Resilience of Fashion Retail Stores

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 external shocks. Furthermore, stores that chose to be more differentiated (reduced assortment similarity) and to keep a fresher inventory (faster inventory days) were also able to attenuate the impact of the pandemic. 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.