Introducing Coresight Research’s Retail Robustness Index

The Retail Robustness Index evaluates five main criteria:

1. How was the retailer’s financial health prior to the outbreak? This calculation is based on retailers’ publicly reported financials, such as its income statement, balance sheet, and the value of its stock. Many retailers have recently drawn on their credit lines in order to give them a cash supply to weather a temporary decline in sales.
2. Does the retailer sell domestically or internationally? Retailers with geographical diversity in their sales could be better off than those who exclusively sell into a market that is shut down.
3. Does the retailer sell only in physical stores, or does it sell partially or primarily online? If a retailer’s physical stores are closed, then that channel is unlikely to generate significant cash. If a retailer has an operating online business, it can possibly expand it, keeping vital communication open with consumers and also generating precious cash.
4. What categories of products does the retailer sell? At present, consumers are more focused on acquiring the essentials and less on dressing well (especially since many are staying at home). Thus, product assortment can favor or challenge a retailer. Recent data show that sales of essentials have boomed, whereas sales of apparel and accessories have declined. Moreover, most grocery and drug stores have remained open, while most apparel stores are closed.
5. Finally, management is an essential ingredient to withstanding the current environment. Retailers with seasoned management teams are more likely to know how to get things done efficiently at their companies and they have possibly lived through and other downturns before, versus a newly arrived CEO still learning the ropes.

Our Index calculates a Robustness Score based on a weighted average of these five factors and can be used to understand the factors that position retailers better to navigate the current retail environment.