15th June 2020
Article by Natasha Frangos, Partner, Head of Corporate, and Head of Creative, Media and Technology posted in the June 2020 edition of Boutique magazine.
As lockdown restrictions begin to ease in the UK, an end to the COVID-19 crisis period is in many ways coming into sight. Businesses are now considering how they might be able to return to operating as close to ‘normal’ as possible, for which careful planning needs to take place. For those in the fashion and retail sectors, the situation is already complicated with the need to keep both customers and staff safe under COVID-19 secure guidelines. But for boutique businesses, where teams are smaller, and space and resources are restricted, the reopening of physical stores as early as June may come with a number of practical and financial issues.
Figuring out financials
Although government support has indeed eased the pressure for retail businesses, cash remains a major concern. Businesses have taken steps to stem the outflow of cash as much as possible, making use of the now extended Job Retention Scheme, or applying for business rate grants. But many businesses, particularly smaller independent retailers, are still faced with a struggle to apply for loans and have been hit by severe delays to the much-needed boost hitting their bank accounts.
Many small retailers should therefore carefully consider their cashflow and the financial feasibility of reopening before making plans to do so. There are a number of additional factors and subsequent costs that will need to be considered as a result of social distancing measures: limiting the number of customers in a store at any one time; ensuring thorough and regular deep cleaning; or even asking customers to avoid touching products. Additionally, opening hours may need to be reduced, so as to ensure that stores are appropriately prepared before customers arrive and cleaned after closing.
Moreover, with footfall far from a guarantee, especially in formerly busy tourist hot spots, the cash inflow from reopening physical shops is by no means set in stone. With this in mind, operators may have to ask themselves if now really is a sensible time to reopen.
Many stores have already taken this crisis as an opportunity to drive forward their online offerings and digital platforms and there is certainly a case to continue these efforts. A return to normality may still be some time away, so boutique shops should continue to maintain their connections with existing customers via online platforms.
Regardless of whether or not the decision to reopen is made, businesses should also factor in issues relating to stock. For those who rely upon accessing stock that is currently being held internationally, complications may arise as different countries remain in different stages of lockdown with varying guidelines in place. This could result in delays to receiving orders or similarly could affect shipping of sales internationally. Additionally, having been closed for a long period time, many may now have excess stock from previous seasons left over and might consider sample sales to clear room for new items.
The future of the physical store
In the longer term, and despite what many may say, the resilient local high street will emerge on the other side of this crisis. Having been kept inside for months now, consumers may be craving the ability to touch and feel physical products more than ever before.
In fact, the trend of experience-based shopping may well have been accelerated by the current situation and consumers will value workshops and the personal shopping experiences they find in boutique stores. What’s more, consumers will want to engage most with the brands that matter to them, whether this be those that have focused efforts on improving sustainability of products or perhaps those who have demonstrated good ethics throughout the most difficult periods. The sense of community has been rallied and shoppers will be eager to play their part in helping local and ethical businesses survive.
Despite all the buzz around shops reopening this month, it is vital that smaller fashion stores proceed with caution. A number of logistical and financial factors will need to be considered carefully – and rushing into reopening could affect relations with consumers and staff in the future.
By reviewing whether it is financially viable to reopen your store immediately and carefully planning out a strategy to reopen with safe social distancing guidelines in place, boutiques can ascertain the best possible plan for their return to business as usual.