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How could the coronavirus impact on ASX retail shares?

Concern over the coronavirus has reached fever pitch in the last few weeks and ASX retail shares are feeling the heat. There has been widespread panic as Australians have rushed to stock up on supplies from Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW).

The mass hysteria has been sudden and immense, given this is the first widespread virus to hit since the advent of social media. But amid all the panic, how would a coronavirus outbreak affect Aussie retailers?

Why some ASX retail shares could benefit

Some of the ASX retail shares could benefit in a surprising way. As Aussies rush to stock up on supplies, there really aren’t that many places to do their shopping. The shelves in Coles and Woolworths have been stripped bare of medical supplies, long-life food, and toilet paper.

That could translate to higher sales numbers for these ASX retail shares if the crisis drags on. However, it’s not all good news for Coles and Woolworths shareholders. This outbreak is just beginning and we’re already starting to see supply issues weigh on businesses. While short-term sales might spike, there are questions around just how well long-term operations are equipped to deal with the crisis.

What about electronics retailers like JB Hi-Fi?

While the supermarkets may be doing OK for the moment, I think it’s worth looking at ASX retail shares of those groups specialising in electronics and white goods.

The likes of JB Hi-Fi Limited (ASX: JBH) Ltd (ASX: KGN) and Harvey Norman Holdings Limited (ASX: HVN) are the ones I’m watching. These companies all make significant money off of products manufactured in Asia.

If an effective shutdown drags on, that could hit these ASX retail shares in 2020. Less manufacturing means fewer products to sell which could hit the bottom line quite quickly. While these companies have been around for years and should have contingency plans in place, the question mark still remains.

Foolish takeaway

There are still many unknowns with the coronavirus outbreak and lots of misinformation floating around. However, it seems a near-certainty that it will affect economic growth regardless of the public health implications. If that’s the case, I think ASX retail shares will be under pressure if this drags on into late 2020.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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