The New Normal. Retail Post COVID-19, Lessons from Austria & China
If we take a page from the playbook of countries that are returning to work after bringing the COVID-19 pandemic under control we are in store for a new normal. In mid-February of this year businesses in cities like Shanghai that were among the least affected by the virus started to reopen. Gradually over time there has been an easing of quarantine restrictions across China and by April 8, 2020, Wuhan, the city at the epicentre of the pandemic will have one of the final restrictions, a ban on outbound travel, lifted.
This gradual return to work and life means that the retail sector is unlikely to bounce back quickly. Instead store openings are often triaged depending on type of store (small or large, less discretionary or not) or where the store is located. In Austria, where COVID-19 appears to be under control, small retail stores have the greenlight to open after Easter on April 14th while larger stores are slated to open on May 1st.
Even the shopping experience will change in an effort to ensure that the pandemic does not return. Shoppers in stores in Austria are now required to wear a mask while grocery shopping. Other changes you should expect to see include lingering social distancing requirements, tepid retail traffic and ongoing uncertainty about when things will be back to a normal as we know it.
1. A gradual reopening of the retail sector
Austria is in the process of slowly getting the economy going again by reopening stores. It is the first country in Europe to ease its lockdown measures due to the pandemic. As of April 6, 2012 it had recorded 12,058 cases of the coronavirus and 220 deaths. But the daily growth new infections has slowed considerably to just 1.6%. Stores are not reopening all at once. Instead they are opening on a staggered basis. First out of the gate are small retail stores that are less than 400 sq. metres as well as hardware and garden stores. These stores will open after Easter on April 14, 2020. Then larger stores, malls and hairdressers will open on May 1, 2020.
Restaurants and hotels will be closed until at least mid-May although a final decision on when they are reopening will not be made until the end of April. Public events in Austria are banned until the end of June. Despite a general loosening of quarantine restrictions, schools will remain closed until mid May 2020.
As you can see the retail sector in Austria and in other parts of the world will not quickly bounce back. Rightfully so, precautions are being taken to ensure that the virus does not make a resurgence. Similar measures have taken place in China. At the beginning of last month on March 11, 2020 China began to loosen restrictions placed on residents in Hubei province, the epicenter of the pandemic. Approximately 80% of the China’s more than 2,500 COVID-19 deaths occurred in Wuhan the capital of Hubei. Businesses deemed essential were allowed to reopen in Hubei starting on March 11th. A week later, on March 20th more businesses were allowed to reopen including several supermarkets and public transit services. By April 8th the lockdown on Wuhan the capital of Hubei will be lifted.
Outside of Wuhan provinces were divided into different risk categories (high, medium and low) to determine in what order businesses would open and when. High risk venues like karaoke bars, movie theaters and beauty salons were ordered not to open until the outbreak was over.
Retailers like Apple also took a gradual approach to reopening its stores in China. Apple reopened stores over a number of weeks and store hours were reduced upon opening. For example, as Apple began reopening its 42 stores located in China it started by opening five stores in Beijing on February 14th from 11:00 am to 6:00 pm instead of opening for normal store hours of 10:00 am to 10:00 pm.
2. Social distancing and other restrictions continue to persist
If you travel to Wuhan International Mall in China you will see signs that while the coronavirus pandemic is under control, it has left its mark. Mall employees wear masks and carry signs saying: “please wear masks all the way. Please don't gather. Please keep a safe distance." New protocols are in place to keep both shoppers and employees virus free. Hand sanitizer is on hand in many stores for shoppers and employees to use.
Store employees often check customers for fevers and ask shoppers to show their smartphone Health Code before entering. The government mandated health code displays a green code on a users’ smartphone if the person does not have coronavirus symptoms and is free to travel. If the code is red that signals that the person has a fever or other symptoms and should be in quarantine for two weeks. A yellow code means that the person may need to stay at home for seven days. The assessment is based on a questionnaire users answer and submit using their smartphone.
Other precautions including requiring mall patrons to stand five feet apart while riding mall escalators. After shoppers have tried on clothing in stores, the clothing is sprayed with disinfectant. New protocols also extend to subways where transit riders must sit two people apart and wear masks.
Speaking about lessons learned from operating in China during the pandemic, Apple CEO, Tim Cook said: “the most effective way to minimize risk of the virus’ transmission is to reduce density and maximize social distance.” After two Apple stores opened in Shanghai there were lines of people waiting outside to enter due to restrictions on the number of people that could shop in the store at one time.
Austria is planning to implement similar restrictions. Only one person per 20 sq. metres (215 sq. ft) will be allowed in a retail store at a time. Shoppers have to wear masks in grocery stores and pharmacies larger than 400 sq. metres (4,306 sq. ft). If a shopper does not have a mask they can also wear a shawl or a scarf. Masks also have to be worn in Austria while travelling on public transit. If anyone fails to wear masks in stores or on public transit in Austria they will be fined 50 euros ($54).
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3. Tepid store foot traffic
People living in China who were under lockdown are excited to be out and about again but understandably they are still very concerned about their health. Store foot traffic has not recovered yet to pre-virus levels. An employee working at a Walmart in a suburb near Shanghai said that traffic is "less than half of usual levels." This is the case even though Shanghai had a relatively small number of coronavirus cases and people living in Shanghai started to return to work in mid-February, much earlier than in other areas of China. As you can imagine everyone does not feel comfortable shopping in the aftermath of a pandemic. By the end of March mall traffic in Shanghai was at 30% of pre-virus levels.
The belief that economies would face a quick v-shaped recovery in the aftermath of the pandemic are starting to dwindle. At the beginning of 2020 the Chinese government was targeting a 6% growth rate but the World Bank now believes that China’s economy will grow by 2.3%. This is a sign that other countries will also take a longer road to recovery than was initially was hoped for.
4. Ongoing uncertainty
Just because the worst of the pandemic appears to be over doesn’t mean that it won’t strike back. 600 movie theatres that reopened at the end of March in China out of a total of 70,000 in China abruptly closed eight days after they reopened. In Shanghai many tourist attractions were also ordered to close after reopening for only 10 days. In Shanghai indoor tourist attractions have also closed again after reopening only for a short period of time.
In the city of Jinzhou, in Liaoning province places where people gather including clubs, karaoke bars, internet cafes recently reopened but yesterday they were ordered to close again. Experts believe that the risk of a resurgence of coronavirus cases is high. Part of this is due to the high proportion of “silent carriers” of COVID-19. Silent carriers, which represent up to 33% of people infected with the virus, show no or delayed symptoms making it easier for the virus to spread. This means that even when the outbreak is declared to be over or on a downward trend if stores start to reopen there is a possibility that they and other businesses could close at a moment’s notice if there is a spike in new cases. In Jia county in China, 640,000 residents were recently put back under lockdown after a second round of COVID-19 cases popped up.
In Austria, the Chancellor Sebastian Kurz has said that he will apply an “emergency brake” at anytime if it looks like the progress the country has made backtracks. Speaking about the reopening of business Kurz, said: “we will watch things closely.” “If the (infection) figures continue to develop in the right direction, then the next step will take place on May 1, 2020. If we are not successful, then we must pull the emergency brake.” The Chancellor pointed to Singapore as one of the reasons why Austria must be so cautious. Singapore contained a first round of infections but is now battling a second round.