March 18, 2020 / 7:48 PM / in 16 days

What is essential? Retailers face confusion over government rules on store closings

WASHINGTON/NEW YORK (Reuters) - As the United States moves to quickly curb the spread of the coronavirus, the question of which retailers can stay open - and where - depends on what government officials deem to be essential.

Grocery stores, gas stations, pet stores and pharmacies so far are universally defined as “essential” and allowed to stay open. Many have seen sales soar as shoppers frantically buy everything from toilet paper to frozen vegetables to peanut butter to medicine.

But clothing retailers and department-store chains are “non-essential” and therefore have no choice but to close. Macy’s Inc (M.N), Nordstrom (JWN.N), Nike (NKE.N), Urban Outfitters (URBN.O), Abercrombie & Fitch (ANF.N), and Lululemon (LULU.O) have closed their stores across the United States.

In the gray zone are electronic stores, bookstores and hotels.

President Donald Trump on Sunday said he had spoken to the CEOs of large retailers like Walmart Inc (WMT.N) and Kroger Co (KR.N) and that they were “working hand-in-hand” with the federal government, as well as the state and local leaders, to ensure food and essentials are constantly available.”

Beyond that, he did not spell out what federal officials see as essential, leaving retailers fretting about a lack of coordination among federal and local government officials.

“Certainly on an interim basis and on a long-term basis, that definition is quite different from person to person,” Brian Dodge, President of the Retail Industry Leaders Association told Reuters. He cited examples of pet stores, home and auto supplies, farm and agriculture equipment among others that are key in addition to food and medicines.

The organization, together with the National Retail Federation, sent a letter to the National Governors Association and the U.S. Conference of Mayors, urging them to provide clarity around “essential” and “non-essential” businesses.

Dodge, whose group counts Walmart, Target, Best Buy, Home Depot (HD.N), Lowe’s (LOW.N) and Dollar General (DG.N) among its members, said many retailers have a sense of whether they are essential or not and that is already guiding their decision to either remain open or close.

But in the case of hotels, it is not so clear.

Pennsylvania’s Governor Tom Wolf on Sunday classified hotels as essential, while Nevada’s Governor Steve Sisolak on Tuesday ordered hotels to shut to the public for 30 days.

Marriott, the largest hotel company, confirmed Tuesday it was beginning to furlough what it anticipates will be tens of thousands of employees, and Hilton’s chief executive said occupancy was down to 15% and hotels in some cities were shutting down.

DIFFERING DIRECTIVES

U.S. states have pleaded with the Trump administration to coordinate a national response to the outbreak, saying patchwork measures enacted by state and local authorities were insufficient to confront the emergency. The tally of confirmed U.S. cases has multiplied in recent weeks, now surpassing 6,400.

One senior official at an electronics chain, who spoke on condition of anonymity, noted that it had not shut its stores because at least some of its product and service offerings -including urgent repairs and installations - should be deemed essential. Local authorities should “exercise caution” before announcing any further recommendations or requesting the closure of retail businesses, he said, so as not to leave Americans stranded without access to technology.

In the San Francisco Bay Area, an order by local officials to comply with a three-week lockdown has many bookstores closing their physical shops.

Amazon.com Inc (AMZN.O) on Tuesday said all of its warehouses in the U.S. and Europe will receive only essential products until April 5, a move to free inventory space for medical and household goods. It counts baby products; health and household items; beauty and personal care; grocery; industrial and scientific; and pet supplies as essentials.

As for books? It said they are also essential. Among smaller chains, Birmingham, Alabama-based Books-A-Million, which operates approximately 200 stores across the country, said it considers itself an essential service and their stores have a “unique role” to play in this environment. “It’s our hope to remain open to serve customers wherever we can do so ... Books and educational support materials have never been more needed than they are today,” Chief Executive Terry Finley wrote to employees on Sunday.

A company spokesperson was not immediately available on Wednesday to confirm whether or not it had closed stores.

Reporting by Nandita Bose in Washington and Melissa Fares in New York; Editing by Vanessa O'Connell and Nick Zieminski

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