Last week, we held a second Store Operations Leaders Virtual Coffee hour with representatives from apparel, luxury, and off-price retailers. With states easing stay-at-home restrictions, it’s clear that retailers are moving from design to a phased roll-out of their reopening plans. During this month’s session, the conversation centered on strategies around reopening, rehiring, fitting rooms, and returns. The group also touched upon results from APAC, in addition to the role of the store moving forward (hint: they’ll still matter).
Store Leaders Expect to Reopen with Reduced Hours, Less Shifts, and Capacity Limits
The retailers on the call expected to reopen all their stores in 2020, but in a phased approach based on local regulations. Traffic is expected to be down throughout the year due to state imposed capacity limits, as well as shopper fears in returning to stores. The general expectation was that stores would be at 20-25% capacity levels throughout the year, which will have an impact on hours. Many malls are reducing their hours, causing a ripple effect on stores. Free-standing stores are also reducing their hours in anticipation of less traffic. Given the reduced hours and traffic, many stores are using single shift models. They‘re also pushing cleaning, merchandising, and stocking activities to off-hours to help focus on sales during operating hours.
APAC Results Vary, but Point to More Focused Shopping Missions
One retailer reported having 100% of their Chinese-based stores open. Shoppers in China are still leery to return to the stores, with traffic down at least 50%. Shopping missions continue to be very focused, contributing to higher–than–average ATV and conversion. Across the region, markets that aren’t tourist hotbeds seem to be recovering faster than tourist destinations. Non-tourist markets are performing 20-30% below comp, while tourist markets are performing at least 80% below comp.
Questions Remain on How Best to Handle Fitting Room and Return Logistics
Many of the retailers have chosen to either close fitting rooms entirely or tighten fitting room protocols. Tightened protocols include frequent cleaning of the fitting room areas, reduced number of usable fitting rooms, quarantining merchandise that’s been tried on, and requiring appointments to access a fitting room. As a result of the closures and restrictions, some apparel retailers are providing shoppers with disposable tape measures and guiding them on how to properly measure themselves. Retailers are also updating return protocols, creating dedicated return areas within the stores as well as quarantining returned items.
Employee safety and effective cleaning around fitting rooms and returns remains a top concern for retailers. One retailer has empowered their Store Managers to close fitting rooms, and deny returns if team safety would be at risk. There aren’t many clear-cut answers on the best products and tools to help in the cleaning process. APAC markets have approved a sanitizing spray, however there’s currently not a CDC–approved equivalent for use in the US.
No matter the market, retailers are instructing stores to make sure customers are aware of their cleaning protocols and are encouraging them to be as overt as possible while cleaning key areas of the store.
The Need for Less Staff Leads to a Selective Re-Hiring Process
Many retailers have completely reset their 2020 labor budgets. The expectation is that staffing levels will be down 30% and may not start to rise until the third quarter. Seniority, job functions, and performance are the factors being used to decide which employees to bring back. Allocation levels may be so low that some stores will only bring back their management team. Retailers are delaying re-hiring individuals who primarily perform receiving or markdown tasks, as they won’t be needed in the early stages of reopening. Pre-COVID performance has been a factor in some re-hiring decisions as well.
Omnichannel Leads to a New Way to Use Specialists to Service Customers
Specialists will still have a roll in the new retail landscape, but they’ll be required to use their skills in new ways. The heightened role of ecommerce has reinforced the need for omnichannel specialists within the store. One retailer has found success in offering virtual clienteling to customers, utilizing sales specialists to discuss products and shop for them via video chat. In other cases, specialists have been used to engage shoppers on social media or to call frequent customers.
Stores Will Change, but the Opportunity to Reinvent the Store Will Still Make Them More Relevant
Retailers on the call did feel that stores will be different once a new normal is established, but they’ll still be important in creating a personal connection between the brand and shoppers. Fleet sizes will be reduced, stores will be smaller (as much as 30%), and retail in general will feature blurred lines between the physical and digital channels. From testing more in-store fulfillment options, to developing new ways to interact with customers, Operations leaders are taking advantage of the opportunity to reinvent the store.
As the call closed, one retailer shared a story about their virtual store visits in the Middle East, which included customer conversations. Without prompting, the customers were appreciative of having stores open, happy to be able to touch and feel products again, and were excited to get back to a sense of normalcy.