The Supply Side: Reopening retail will have its challenges

Retailers and malls across the country, outside of grocery and restaurant takeout, have mostly been closed since March as COVID-19 spread. The National Retail Federation (NRF) and Retail Industry Leaders Association (RILA) on April 27 released a blueprint for shopping safely as states begin to reopen those stores in May.

“As conversations turn to the reopening of the economy, retailers are uniquely situated to provide input, because we’ve been on both sides of the stay at home orders,” said Brian Dodge, RILA president. “Groceries, pharmacies and other retailers that have remained open have implemented practices and protocols that are keeping employees and communities safe.”

Dodge said the blueprint builds on the successful practices of open retailers. The blueprint was also developed with the guidelines of the Centers for Disease Control and Prevention (CDC) and public health experts aimed at keeping store personnel and shoppers safe.

While each state will dictate the time for reopening in cities where closures were mandated amid stay-at-home orders, the blueprint suggests three phases of reopening retail. Each phase has a long list of requirements such as the use of masks, social distancing, store sanitization on a regular basis, checking temperatures of staff and health screening of all employees.

“Consistent guidelines — without overburdensome regulatory schemes — across all levels of government is critical,” said NRF CEO Matthew Shay.

Scott Benedict, director of retailing studies at Texas A&M University, said how to reopen has been a major concern among retail businesses, consumers and the labor force. He said the guidelines from the NRF and RILA are thoughtful, achievable and responsibly offered based on existing conditions.

RISKS OF REOPENING
“Only time will tell if beginning to reopen some retail businesses can be done safely across the board, or like many things in life the retail industry will be judged … for good or bad … by the actions of the worst-case example of a retailer that does not act responsibly to protect their associates and their consumers,” Benedict told Talk Business & Politics.

Carol Spieckerman, CEO of Spieckerman Retail, said it’s good to see leading industry groups joining together to put something forward, given the fragmented and contradictory information being issued at federal and state levels.

“It appears the main plan is to aggregate data and promote best practices, which do provide value. Retailers and employees up and down the supply chain will want to know what others are doing and how it is working [or not],” Spieckerman said.

She said some of the information on the National Retail Federation website with resources for navigating store openings appears to be firewalled as “members only,” which she said was unfortunate from an access standpoint for small retailers.

“Taking an open-access approach would provide real benefit to the industry,” Spieckerman said. ”Liability, accountability and timing are the big variables in play, and there won’t be a clear-cut path to follow.”

Benedict agreed, saying retailers are genuinely concerned of post-pandemic liability claims from workers forced by economic concerns to return to their jobs because there is still a lack of COVID-19 testing. He cautioned that just because a retailer is open doesn’t mean customers will feel safe shopping in brick-and-mortar.

“Retailers who do not create what is perceived as a safe shopping environment for customers will not see their business return to anything approaching normalcy to be sure. Customers vote with their dollars, and they’ll likely vote to shop where and when they feel it’s safe to do so,” Benedict said.

Spieckerman said the degree of consumer safety is largely based on perception, and that’s a problem. She said most people are familiar with best-case protective measures, yet full knowledge of transmission risk remains elusive.

“In the meantime, shoppers who feel invulnerable or even defiant can potentially endanger those who are concerned. The mall experience is largely based on browsing and shopping rather than efficient pre-planning. That immediately puts mall openings at odds with current expert advice,” she said.

Jason Long, CEO of Shift Marketing, expects retailers will try to reopen in the next two to six weeks. He said shoppers are smarter now and know to distance and not hug or shake hands. He is watching to see for any uptick in cases once people are out and about.

“This could be a bumpy ride of openings then closings … Many consumers may stay away, and this will hurt the already injured brick-and-mortar stores,” Long said.

FIRST MOVERS
Simon Property Group, the nation’s largest mall operator, announced plans to reopen 49 of its malls and outlets by May 1. That included central Arkansas retail centers McCain Mall and Park Plaza.

The company said it would provide free CDC-approved masks and hand sanitizing packets to shoppers who ask for them. It said it will make free temperature testing available to customers using infrared thermometers. The malls will operate reduced hours to allow for cleaning overnight in addition to regularly sanitizing high touch areas. Social distancing will be required as the number of patrons will be limited to one person per 50 feet of space.

The mall operator said it will encourage shoppers to wear masks or some sort of facial coverings while they shop. Simon is mandating its employees to wear masks while they are working and take frequent breaks for handwashing. Retailers in the malls are also being asked to use no-contact forms of payment where and when they can.

Mall anchors Macy’s and Dillard’s were among the first retailers to reopen stores in certain areas. Macy’s began to reopen stores May 4, starting with 69 locations in southern states. The retailer plans to have all of its 777 stores open within six weeks. Dillard’s reopened 55 stores in Arkansas, Missouri, Oklahoma and Texas.

These first movers are following protocols outlined by health officials and examples from retailers that have remained open through the crisis.

Macy’s expects its reopened stores to bring in only about 15% to 20% of its typical business at first and slowly build, according to CEO Jeff Gennette, who said whether shoppers would return remains an open question.

An April survey by the McKinsey Group found 67% of respondents said they expect to spend less on apparel and non-consumables in the future. The reason given is fear of loss of income and uncertainty about how long the country will be in a recession.

Forrester retail analyst Michael O’Grady said consumers are spending more on groceries but other categories such as fashion, beauty and cosmetics are seeing a big decline in consumer spending. He forecasts a 20% drop (loss of $360 billion) in non-grocery sales in 2020 as the pre-pandemic forecasts for growth have been erased. He expects online sales to be flat this year.

O’Grady said it will take four years to recover to pre-pandemic levels for global retail sales.

Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.