After the unprecedented shuttering of most physical store locations across the U.S., many retailers are now preparing for the “grand re-opening of retail.” While this is a positive sign for millions of unemployed workers and ultimately, the economy, there remains many unknowns for retailers. The customers they closed the doors on in March are not the same ones that they will open to in the next few weeks/months.
One of the first considerations for many retailers is how to open locations back up to customers. When should you re-open? Do you base it on specific state or local dates or wait and allow for a more controlled examination of the current local situation and safety issues? Do you try to open each location as quickly as possible or do you make each store re-opening an event with a fresh re-set of the store? While it is tempting to open stores as quickly as possible, just because stores are allowed to open doesn’t necessarily mean that customers will immediately respond and return to in-store shopping.
Unfortunately, there is no easy checklist to walk through as there is no one-size-fits-all solution to guarantee that customers will come back and business will recover. This is a complex situation with no pertinent historical data to consider, so now is the time to thoughtfully analyze and understand your specific business within these four main areas:
Whatever the customer experience in your stores looked like three months ago, it will unlikely be the same going forward. How do you need to alter the customer experience to ensure your customers are comfortable and feel safe in your store? How do you create a safe and welcoming environment while maintaining social distancing?
Start with an understanding of your pre-crisis customer journey to understand how customers generally located your stores and shopped. What were their expectations of your product assortment, associate interaction, fulfillment capabilities, and how did technology enable their customer journey? Understand the customer journey from discovery, all the way through purchase, including the return process.
With an understanding of the customer journey, begin deconstructing the steps to understand the effect today’s environment changes the journey. For example, if you are a fashion retailer where the typical customer interaction involves the associate approaching every customer who enters the store, how do you change the model to observe social distancing? Also, consider how customer behaviors have changed as the majority of purchases over the last few months have been digitally initiated with store fulfillment. If you have been offering customers the ability to use curbside pickup as an option, can you continue to provide this once your store location is now also open for business with customers shopping inside the store?
Working through a decision tree on customer/associate behaviors to build a new set of customer journeys will provide the groundwork for creating new procedures to be implemented within the store.
With nearly a quarter of the workforce currently unemployed and many retail associates furloughed as business ground to a halt over the last few months, a big question is whether all retail associates will – or should – be called back to work. Now is the time to review your workforce to understand how demand may build up again and what employees are needed as that occurs. A good question to ask: do I have the right people and am I organized efficiently? Smart retailers are looking at how they can accomplish what’s needed with fewer associates.
With changes in how customers and associates interact due to social distancing and safety issues, what changes to associate protocols need to be made within the store? If associates are required to wear masks, should you supply them so there is brand consistency? Do you require your customers to wear masks while shopping in the store and if so, how do you enforce it? If your employees are afraid to come to work for fear of getting sick from customers and customers are afraid to shop for fear of getting sick from employees – how do you ensure everyone is safe?
With social distancing in place, there are changes that need to be made to the customer service model. Examine your model from a customer-centric point of view and then create your associate environment around this. If people need to stay more than six feet away from each other, how do you instruct your associates to help customers? How can they stock shelves or help a customer locate products? How can they ensure that the proper cleaning measures are undertaken with customers in the store? Do you instruct associates to stay behind cash wrap desks and install plexiglass shields to protect them? Or maybe more services can be shifted to customer self-service to avoid interaction?
It will be a challenge to identify how associates can be both welcoming and distant at the same time in a way that allows customers to be comfortable shopping in the store.
Most retailers are sitting with excess – and likely out-of-season – inventory in their stores and warehouses as demand drastically decreased over the last few months. Now the question becomes what to do with that inventory. This is a complex question specific to your environment and business model.
Each company needs to look at their inventory position and what the current expectations are – if you are in a highly seasonal business then your merchandise is out-of-season. Do you pack it away? Do you have space to store excess merchandise? Or do you immediately try to liquidate your current stale inventory to provide cash to pay employees, rent and new deliveries? Can you ship out-of-season inventory to another region where it may be more likely to sell and re-balance your assortment?
If you offer non-seasonal goods you need to look at whether deliveries are in line with sales expectations – what will May/June/July sales look like this year compared to last year? Again, there is no sales history to base this on as demand begins to increase over the next few months.
And finally, with 15% unemployment, do you expect your customer demand to rebound? Should you plan for 10-15% below normal and then work with that plan? Other options include adjusting deliveries, suspending orders, and trying to increase demand by putting basic items on sale.
With many store locations closed for an extended period of time and the resulting shift to online for the majority of purchases, now is a good time for retailers to re-think their stores. What should the store model be when it reopens? How does order pickup in the store look? Do you/can you offer curbside pickup? Are there systems in place to support these models in the long-term? Many retailers have offered these services during this crisis, but they were mostly put in place on an ad hoc business. Can these services continue now that the store associates and systems will now also need to support customers shopping and purchasing in the store? With stores opening, what kind of omni-channel business do you want to support going forward and what is required to ensure it can operate?
A bigger question may be whether all store locations should even be reopened. There is a strong argument that the U.S. was over-stored before the current situation. Over the past 20 years e-commerce has grown and become a larger percentage of overall sales but there has not been a corresponding decrease in store square footage, in fact it has increased. Now, with higher demand for e-commerce, can the same number of stores be supported?
Retailers should be examining all locations to decide if they should be re-opened and how. If you operate 30 stores supporting a metropolitan area, can all locations really be sustained, or should some locations operate as dark stores to fulfill local online orders. Or maybe operate them as dark stores until the lease is up and then close the location. Some stores may also be better utilized as clearance centers to liquidate the out-of-season inventory that needs to be removed from stores to move forward.
The grand re-opening of retail is an opportunity to think of your stores as fresh locations and to think about the people, processes and technology to support the customer experience moving forward in those locations. Think of this as a free hall pass – investors expect business to be bad for a while so utilize this time to take a fresh look at each location and make smart and profitable decisions to move forward wisely.
-Gene Bornac, Senior VP of Retail Consulting, enVista