Then and Now – Essential Learnings From a Global Pandemic
The events of early 2020 caused huge disruption to the retail industry, but two years on, are we still facing the same challenges?
In this article, retail specialists from Shoosmiths look back at the prevailing pre-pandemic themes impacting the industry, as covered by The Retailer in its Autumn 2019 and Winter 2020 editions, to evaluate the ‘then and now’.
WORKFORCE CHALLENGES
Employment lawyer, Lauren Bholé, comments:
“In late 2019, Brexit was seen as the primary obstacle, with retailers considering how the UK’s departure from the EU would impact their workforce. Little did we know that Covid would provide the ultimate trump card and prompt a complete makeover of the retail sector.
“Fast forward two years and data from retail analytics company, Fourth, shows that the biggest issue for retailers (94%) is talent shortages, requiring retailers to consider tech solutions, hybrid shop floor / back-office roles and applicants from non-EU countries (factoring in immigration requirements), as well as longer-term options such as reviving internship programmes and local university partnerships.
“So, with staffing at most retailers still nowhere near pre-2020 levels, it is clear that the pandemic has only caused to replace one obstacle with another, and that retailers will now need to go even further in their pursuit of talent.”
WHAT IS A RETAIL LEASE?
Real estate lawyer, Ruth Clare, comments:
“The concept of a market position on retail leases in 2021 is hard to nail down. The movement on key lease provisions, particularly length of term, breaks, turnover rents and pandemic suspension clauses, has further muddied the waters since 2019. As with uninsured risks twenty years ago, we hope that a market position will emerge over time for pandemic clauses, but the last two years have provided few new lettings for guidance. A number of landlords and tenants continue to regear to reduce rents and push out break dates, and all are assessing long-term requirements for space.
“What is more, many deals are being done through side agreements so the leases which can be openly discussed are not reflective of the actual terms being agreed between the landlord and the tenant. The concessionary positions are documented confidentially to get the deal done and, arguably, protect the landlord’s investment position. These can sometimes be justified due to the nature of the tenant but are these side deals really what is best for the market? Certainly, they achieve the short-term aims of a landlord to secure tenants who will drive footfall and pay service charge and business rates liabilities, while assisting tenants to continue their bricks and mortar offering on a cost-effective and flexible basis. However, the absence of genuine evidence of the terms on which space is available may not prove helpful in the medium or longer-term.”
OMNI-CHANNEL V BRICKS AND MORTAR
Commercial lawyer, Luke Stubbs, comments:
“As soon as we entered the first lockdown in 2020, omni-channel went from being part of a wider customer experience to the only customer experience for certain brands. Retailers who had traditionally relied on a more “personal” in-store experience had to change tack quickly, while those with existing online platforms had to deal with challenges around stock levels and fulfilment. The future of retail depended on how well businesses could respond to the changed environment, tackling head-on the need for a digital presence, the realisation that (use of) cash is no longer king, new AR and VR shopping experiences and the enhanced array of delivery options.
“Two years on from that surreal spring in 2020, in the same way that the nature of office-working has been changed for good, it is brutally clear that the pandemic has fundamentally altered how we shop. Things that were once viewed as “nice to have” have quickly become industry standard and, as retailers closely monitor the return of shoppers to the high street, uncertainty remains.
We will have to wait and see, but one thing is clear, the omni-channel v bricks and mortar debate that was making headlines in 2019 is now not an either/or question, but a symbiotic necessity.”
Ruth Clare adds:
“If shorter-term leases are to become the norm for bricks and mortar shops, how will retailers be able to convince their boards to incur the level of capital expenditure required for a high-end retail fit out? What incentives will landlords have to offer to achieve rents which they can then use to fund reinvigoration of public space and enhancement of the collective customer experience?”
MENTAL HEALTH – TIME TO EQUIP MANAGEMENT
Employment lawyer, Emma Morgan, comments:
“In late 2019, the challenge was to get mental health on the agenda. Retailers were encouraged to open the conversation so that staff felt comfortable talking about their mental health.
“A recent report by the charity, Retail Trust, shows that communication is no longer the issue. Of the management personnel surveyed, 91% had seen an increase in mental health issues since the pandemic started. However, 28% did not feel that they had enough resources to help, suggesting that equipping management with the necessary skills to assist employees needs to be made a strategic priority. Retailers will need to find budget to train management in how to handle mental health issues, think about partnering with their occupational health providers or mental health support providers and even consider appointing mental health “champions”.
“Given the report also found that retail workers are suffering the lowest mental wellbeing of any employee group, the message from back in 2019 has only grown in importance in 2022 - providing management with training to handle mental health will pay dividends.”
To find out more about Shoosmiths and the services they provide to the retail industry, click here.
This article was also published in The Retailer, our quarterly online magazine providing thought-leading insights from BRC experts and Associate Members.