The prevailing view, unsurprisingly, is that retail is deeply suffering while stores stay shuttered across the U.S. to comply with social distancing guidelines.

Credit rating agency S&P is forecasting a 50% decline in second-quarter revenue for retailers considered nonessential, which includes some specialty retailers, department stores and casual dining restaurants, due to quarantines and store closures.

Rating agency Moody’s is projecting that department store, apparel and footwear retailers face up to a 40% decline in operating income overall in 2020.

A survey of retailers conducted by customer experience platform Narvar and research firm Forrester revealed that 20% of respondents have lowered their sales forecast for the year by 25%, while 18% of those surveyed are lowering their forecasts by 5% to 10%.

Stores, meanwhile, aren’t expected to begin reopening until the middle of May at the earliest. Even then, there’s a great deal of uncertainty about when retail locations will open their doors and to what extent shoppers will return due to lingering worries about the coronavirus, according to Deb Rieger-Paganis, a retail restructuring adviser at AlixPartners.

The survey by Narvar and Forrester also found that 58% of respondents expect the crisis to last for longer than three months.

Live to fight another day

The retail industry is certainly facing its biggest crisis in modern times, exceeding the Great Recession of a little more than a decade ago, as consumers contend with stay-at-home orders and restrictions on travel to stem the spread of the coronavirus.

“The current pressure on most discretionary retailers is likely greater than most [or] any management team contemplated in their recession contingency plans,” said Mark Altschwager, a senior research analyst at Baird. “Even the 2008-2009 period does not provide a good playbook; today, we’re looking at some of the strongest apparel retailers in the country operating on effectively zero revenue.”

Rieger-Paganis said the challenge of a turnaround in this environment is that previous projections and operational initiatives are no longer relevant, and retailers have to effectively start from scratch.

“Frankly, any action that reduces ‘cash burn’ in the short run is on the table,” Altschwager said.

To survive, retailers are slashing capital expenditures, suspending dividends and share buybacks, furloughing tens of thousands of employees, cutting marketing, reducing rent and delaying payment to their suppliers while drawing down on their revolving lines of credit to put more cash on their balance sheets.

“You’re in a period where people are trying to control what they can control,” said Steve Sadove, a retail consultant and former chairman and CEO of Saks, adding, “The issue right now is liquidity.”

Consequently, retailers are delaying paying vendors or canceling orders, Sadove said, while some are conserving cash by not paying landlords. It’s a matter of “live to fight another day.”

Economy continues downward spiral

On Thursday, the University of Michigan’s Index of Consumer Sentiment plummeted by a record 18.1 points to 71, the largest monthly decline ever recorded.

“Consumers need to be prepared for a longer and deeper recession rather than the now discredited message that pent-up demand will spark a quick, robust and sustained economic recovery,” the report noted.

According to a survey of consumers conducted by Coresight Research on April 1, roughly half were either afraid of losing their job or having their hours or income being reduced, or had already lost their job as the result of the pandemic. About 89% of respondents also said they were extremely or somewhat concerned about the coronavirus.

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