What should retailers be doing as they brace for the impact of COVID-19?
Coronavirus restrictions vary across Europe, though many countries have announced a range of constraints such as social distancing, public gatherings, flight bans and school closures.
You only need to look at our recent report to see the impact the pandemic is currently having on the retail industry, with shopping centres in CEE seeing footfall nosedive between 23-29 March 2020 – with a year-on-year drop of 76.2%. With many non-essential retail businesses requested to close their doors to save lives and protect their employees and customers, retailers are responding in different ways.
Every shopping centre, luxury fashion outlet, supermarket, coffee shop and fast food outlet is, of course, unique, facing a multitude of challenges during the pandemic. That said, we’ve added a series of general tips that can help you survive the coronavirus outbreak, and maximise performance when you come out the other side.
Protect your people and your reputation
Coronavirus has already taken over 70,000 lives worldwide (at the time of writing this report), and we understand the pressure businesses face to protect the health and safety of their staff and customers. For example, with many retailers’ physical stores closed, the spotlight recently has been on fashion warehouse staff. Though maintaining the two-metre distancing role can prove difficult in certain situations, it is possible with the right processes in place. At the same time, protective gear should be provided to workers, such as hand sanitizer, gloves and masks.
By ensuring greater safety for staff, you can maintain a positive brand reputation, which will serve you well when restrictions are lifted, and the road to recovery begins. Any signs of failure to increase safety measures or protect your employee’s income can cause significant reputational damage, so it’s essential to keep this in mind.
Utilise online operations – but only if it’s safe to do so
There have been many cases where retailers have ceased online operations after being unable to keep distribution and fulfilment centres open, such as McDonald’s, Next, TK Maxx and River Island. As expected, certain categories will benefit more than others during this pandemic. For example, according to the latest IMRG Capgemini Online Retail Index (which tracks the online sales performance of over 200 retailers), UK online sales of electricals surged by 42.4% year-on-year. It is reported that the spike was caused mainly by British consumers purchasing home office equipment, games consoles and freezers to better cope with the lockdown period. With the increased demand for online shopping, traditional retailers may need to consider a more omnichannel model, rather than relying on brick-and-mortar stores.
Access government support and focus on cash flow
Recently the German government said it would provide 2 billion euros in financial assistance to help keep its growing tech businesses afloat. In contrast, the UK government recently launched cash grants as well as the Business Interruption Loan Scheme, which allows retailers to borrow up to £5 million, interest-free for up to 12 months, with no personal guarantees required for loans under £250,000.
The European Commission also approved a series of multi-billion-euro state support packages for Greece, Poland and Portugal to help soften the economic impact of the coronavirus through grants and loan guarantees. It’s crucial retailers gain an understanding of the support that’s available as it may be possible to cover all or most of your immediate working capital and investment needs.
Right now, it’s too early to for retailers to identify the impact of quarantines and social distancing measures across Europe. That said, it’s positive to see China is starting its recovery, stimulating the demand for online shopping, strengthening supply chains and focusing on cash flow. Retailers in Europe can learn lessons and take a more proactive approach, identifying all existing credit lines, and stopping or postponing all non-essential capital spending.
Support frontline workers and protect the vulnerable
From healthcare professionals to delivery drivers and sales assistants, the pandemic has already seen many retailers focus efforts on supporting those on the coronavirus frontline as well as the elderly and vulnerable, offering packages of aid, products and services. It’s not just supermarkets setting aside coronavirus supplies, many fashion brands, both big and small, are working to make a difference.
As the retail sector’s relief network grows, many beauty brands have shifted focus. For example, Louis Vuitton’s parent company, LVMH, has pledged to use its perfume factories to manufacture hand sanitiser to reduce the risk of a shortage in France amid the coronavirus pandemic. Similarly, French luxury fashion firm, Kering, has pledged to create face masks in repurposed factories, as well as donating sale proceeds to charities that are supporting the most vulnerable.
Keep your staff and customers informed
It’s important we all keep a close eye on the news during such challenging circumstances, but do crosscheck stories and monitor trusted sources, such as World Health Organization (WHO) advice as well as local and national government guidance. For retailers, in particular, the information provided to staff and customers must be accurate and timely, so focus on delivering clear communications. Keeping customers informed doesn’t necessarily require daily updates, as you may cause ‘notification fatigue’, yet sharing significant developments is crucial so long as the information is relevant and accurate.
Re-run risk assessments and utilise existing systems and processes
Employers have a general duty to conduct risk assessments, however, as more draconian measures are introduced, and coronavirus cases continue to soar, re-running risk assessments is vital. You can then use the findings to better prepare and respond to potential incidents, while delivering cross-functional recommendations covering key areas such as supply, inventory, workforce, online operations, store operations, business continuity and consumer behaviour.
Look to the light at the end of the tunnel
With people rightly focusing on the essentials that they require on a day-to-day basis, consumer nervousness is growing. That said, every retailer, supermarket, shopping entre or food chain has a role to play in protecting the welfare of colleagues, consumers and partners. There is likely to be a great deal more disruption to supply and demand, retail operations and logistical flows. There are, however, opportunities to innovate, control costs, maintain a positive brand reputation and take care of your staff. Merely waiting out the virus cannot be an option for most retailers.