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As the first states begin to relax social distancing measures and allow stay-at home mandates to expire, managing a retail, consumer, or franchise business is about to get very, very complicated.
The Covid-19 healthcare crisis and the Great Shutdown have been difficult and incredibly disruptive for retail businesses across the spectrum of every industry, category, and size. With few exceptions, essential businesses have been running on significant reductions in revenue. Operators of essential businesses have had to be nimble and creative in tailoring their operating environments to new standards of social interaction virtually overnight. They have had to be mindful of team member and consumer fears regarding virus contraction. And they were the lucky ones. Many more businesses were deemed non-essential, thereby forcing their closure in states with stay-at-home mandates. However, as difficult as the business environment has been, decisions regarding mode of operations have been relatively simple, as the logic behind the mandates has been fairly consistent. That is about to change significantly.
Through the early stages of the Shutdown, most states considered a binary outcome relative to the question of continuous operations: essential or non-essential. For businesses deemed non-essential, there was no decision. Based on jurisdictional mandate, these businesses were forced to close for the duration of each state’s stay-at-home provision (or in some cases, until state leaders amended the original guidance.) For businesses deemed essential, only those willing to adhere to specific modes of operation – for example, take-out only in restaurants or BOPIS (buy online, pickup in store) only for retail) – were allowed to operate.
For the most part, these provisions were fairly consistent from state to state, with a few notable exceptions. Personal services, entertainment, fitness, shopping, gaming, sporting venues, and industrial manufacturing were deemed non-essential and were closed. Healthcare, restaurants, grocery stores, liquor stores, pharmacies, banks, distribution, home improvement, and home services were considered essential, and a general coalescence around a “safe mode” of operations was determined, typically by category. For those businesses in limbo (transportation, daycare, education), market demand largely dictated that although they fell into the latter category, for the most part, they were to operate like the former. The Great Lockdown unfolded in a fairly uniform manner, at least from the perspective of which business categories were allowed to operate, and how.
This uniformity will change this week as the first states begin to relax social distancing measures and the first stay-at-home mandates begin to expire. Business owners, management teams, and franchise operators are now required to manage multiple sets of interrelated and often unrelated variables in deciding how to best determine the most appropriate (and legal) mode of operations – and how to counsel their franchise operators to do the same.
The first set of variables is related to allowable use:
The second set of variables is related to individual choice, and the impact it will have on whether retail units can reopen.
The third variable is the degree to which consumer and brand perceptions align on how a brand should react.
For many consumers, just because a state, a business category, or a specific brand has the right to resume operations, it may not mean that they should. These attitudes appear to be breaking along ideological lines. Consumers who believe that a more protracted period of social isolation is imperative may develop a negative perception of a business that takes a more aggressive stance on reopening. Of course, the converse is true as well. A business may choose to remain closed out of a sense of continued civic duty, while a preponderance of its raving fans may not agree with that position. In either case, the relationship between the consumer and the business can be at risk due to the complex set of variables businesses must use to determine how and when to reopen.
There is no way of knowing how the next few weeks are going to unspool. In some parts of the country, there is a race to reopen as quickly as possible. Businesses and consumers alike are clamoring to be released from quarantine and to get on with the process of determining the new normal. Other areas, generally more hard hit, are being much more cautious.
Guidance from trade associations, federal, state, and local level commissions, and business leaders will begin to codify around best practice, policy, and then regulation. Businesses will need to wade through this matrix to make the best determinations of when to return to and how to balance the pre-crisis levels of consumer interaction with post-crisis levels of business modality.
Editor’s Note: This article originally appeared on LinkedIn.
John Teza is a Principal at NRD Capital focused on NRD's consumer and operations technology investing. Founded in 2014 by Aziz Hashim, NRD Capital is a private equity firm based in Atlanta.