Coronavirus will pummel already weak retailers long after it’s been contained

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The true retail apocalypse is upon us now, courtesy of the coronavirus outbreak.

Big shifts in shopping habits in the past decade have wounded retailers in a disruption often likened to an Armageddon. But that upheaval unfolded in slow motion compared with the nuclear bomb that has fallen on American retail since many chains started closing en masse indefinitely in mid-March.

Weeks on end without revenue—Macy’s said this week it had lost the majority of its sales—and the losses stemming from the merchandise that will ultimately be sold at clearance prices will not only set weak retailers further back financially, but also hurt their relationships with vendors by canceling orders and impede the investments in tech and store updates they need to keep up with rivals.

“This is just going to accelerate what we would have seen play out anyway,” says David Berliner, head of consulting firm BDO’s restructuring and turnaround practice. “It’s going to deepen the difference between the haves and the have-nots.”

Last week, one retailer after the next—ailing ones like Macy’s, Kohl’s, J.C. Penney, and Gap Inc., along with successful ones such as Target and Best Buy—announced measures to conserve cash. On Monday alone, Macy’s, Kohl’s, and Gap Inc. furloughed nearly 300,000 retail workers.

Most major retailers are also cutting back on capital expenditures, including longer-term initiatives designed to better compete with Amazon and one another. Those cash-saving steps are essential now, analysts say, given the uncertainty around how long stores will be closed as well as customer mood once they do reopen.

“Their first responsibility is to have the liquidity to endure a situation that is completely unknown. That’s priority No. 1,” says Christina Boni, a Moody’s Investors Service analyst.

But further out, cutting back on capital spending is likely to hurt many chains’ efforts to modernize their businesses.

Macy’s, for one, had been hoping to expand a new smaller concept store from a prototype location in Dallas, continue to beautify its flagship stores, and overhaul its store brands. But everything is up in the air now. J.C. Penney, in even graver danger, has been trying to modernize its inadequate e-commerce, but its massive debt, and the interest payments that come with it, could crimp its efforts.

Adding to the danger for the many weakened retailers is the timing of this outbreak. This is the time of year retailers are placing orders with suppliers for the holiday season, when many—notably, department stores, clothing chains, and electronics retailers—get 30% of annual sales.

Stores that are short on cash, without any idea of what consumer confidence could look like in eight months, might have a tough time placing orders with suppliers, many of which are reeling from canceled orders. As they restart manufacturing, they are likely to limit whatever production they undertake to retailers that can pay their bills.

“The market share shifts will stem from who has the cash to stay closed the longest and still be able to buy for the Christmas period,” says Nikki Baird, vice president of retail innovation at Aptos, a retail tech company.

What’s more, even if those anxious retailers are able to place orders, they will likely be cautious and choose merchandise too conservatively, erring on the side of being boring to avoid a flop, says Baird. “Retailers are going to reduce their risk of missing the mark.”

Playing it safe is exactly what got plenty of retailers in trouble in the past decade in the first place—by creating a “sea of sameness.” That made consumers view a lot of merchandise as an interchangeable commodity, only worth buying on sale or from Amazon with its better e-commerce infrastructure.

Another risk for struggling department stores, particularly those with precarious finances, from the lower-tier J.C. Penney to luxe chain Neiman Marcus, as their finances worsen: Vendors are now likely to speed up existing efforts to sell more on their own websites and at their own stores to reduce their reliance on department stores, which will now have a harder time updating themselves, says Baird.

This week Ralph Lauren, which last year sold $500 million worth of merchandise at Macy’s alone, reopened its e-commerce fulfillment centers. Neiman has had to contend with brands like Dior and Louis Vuitton opening more and more of their own stores.

A sliver of breathing room

Paradoxically, the spate of retail bankruptcies in the past two years and staggering number of store closings—9,300 locations in 2019, according to marketing research firm Coresight Research—could give struggling retailers some wiggle room to weather the storm, says BDO’s Berliner.

“It’s not like a landlord who kicks out a tenant can find anybody else right now,” says Berliner. “Liquidation values are awful—it’s the worst fire sale you can imagine.”

That can buy the retailers some extra time. The next few months and then the holiday season will be decisive for those on the edge to show they can make a go of it.

But even when retailers do reopen stores, it could take a while for shoppers to get in the mood to spend again, analysts warn. Putting the state of the economy aside, shoppers are likely to be wary of public spaces like stores and indoor malls for a while.

Stores are likely to look very different in the near future, keeping many of the pandemic measures in place, such as minimizing the number of shoppers in a store at one time and stocking less on the store floor to facilitate social distancing—steps that will pinch sales.

“There will be fewer things in stores,” says Aptos’s Baird. In China, she points out, in-store shopping has rebounded relatively quickly, with measures such as taking shoppers’ temperature before they come in or requiring them to wear masks. But such measures might be a tougher sell for Americans and could lead them to shop more online, a punishing development for any retailer with less than state-of-the-art e-commerce.

For now, though, it’s all about survival, with bigger goals set aside for 2021. The next few months promise to be brutal, as many retailers will be scrambling to sell clearance merchandise, putting severe pressure on prices. Nicer stores, fancier apps, and more sophisticated merchandise inventory systems will have to wait, analysts say.

“It’s definitely going to be about cash this year and whether you can get through the storm and have enough left over to invest in 2021,” says Baird.

More must-read retail coverage from Fortune:

Which stores are open—and closed—during the coronavirus pandemic in the U.S.?
—How re-commerce players like Poshmark and eBay are adapting to the coronavirus
—How Nike is overcoming the coronavirus’s impact on its China business
—It may be a while before many of America’s stores open again
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEOs
—WATCH: The greatest designs of modern times

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