Major Retailers Are Bracing for Postelection Riots. Here's What Investors Need to Know

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Though the stakes are high in any presidential election, this year it seems things are more heated than ever. Of course, when we consider the backdrop to this year’s election — a pandemic and recession — all this makes sense. But once the results of this year’s election are announced, which may not happen immediately given a surge of mail-in ballots, law enforcement officials throughout the country will be bracing for riots, protests, and general upheaval.

And they’re not the only ones. A number of major retailers are taking steps to prepare for postelection chaos. And unfortunately, that could really end up hurting their bottom line.

Retailers can’t afford another hit

Nordstrom (NYSE: JWN) just announced plans to board up some of its 350 stores and hire extra security for Election Day in anticipation of riled-up crowds and potential riots. Meanwhile, Macy’s (NYSE: M) is taking extra steps to secure its flagship store in Manhattan due to similar fears.

There’s perhaps never been a year so wrought with political unrest as 2020, and it’s cost the economy in more ways than one. This year, businesses have sustained at least $1 billion in losses from vandalism and looting, which was largely set off by the murder of George Floyd by a Minneapolis police officer in May, reports the Insurance Information Institute. And now, the results of the election could produce similar outrage, prompting protestors to take to the streets and destroy local businesses, some of which may not have the means to hire added security like larger chains.

But major retailers aren’t exactly breathing easy right now. In fact, many are bracing for added losses, not just due to potential looting and rioting, but potentially needing to close down if tensions reach an unsafe boiling point once the election is over and results are announced.

The year 2020 has already been a horrible year for retailers, with dozens of popular names filing for bankruptcy and closing down stores in the wake of the coronavirus outbreak. Layoffs have been rampant in the retail space, and with coronavirus cases surging and many states threatening new restrictions and shutdowns, the situation may very well worsen before it gets better. That’s bad for the retail industry, as well as real estate investors who focus on retail.

If stores are forced to shutter for days or weeks due to safety concerns following the election, tenants will fall behind on rent, leaving commercial landlords in a hole. And a reduction in retail revenue will increase the likelihood of permanent closures, thereby boosting vacancy rates.

A no-win situation

Retailers who board up their windows in anticipation of postelection riots may think they’re doing their part to safeguard their inventory and prevent losses. But here’s the kicker: In doing so, they may also wind up alienating customers.

Still, some stores aren’t taking chances, and given the events of the past months, that’s understandable. Retail investors and commercial landlords, however, can only hope that no matter what transpires after the election, the financial and physical damage is kept to a minimum.