Head of General Counsel Services | Commercial | Retail & Consumer
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As consumers consider recouping pre-lockdown spend, Alex Hammond explores what this means for retailers as they begin to re-open in the next few weeks.
Like many of us, my shopping habits in lockdown have changed drastically, with most of my disposable income now going on essentials such as food and drink as opposed to new outfits and accessories. I no longer while away my lunch hour browsing in shops close to my office, instead choosing to sit in my garden to take a break from my computer screen.
For many non-essential retailers, the change in shopping habits of consumers has accelerated the move to a more omni-channel approach, in the hope of securing online sales despite not being able to open their physical stores. And the shift to online shopping brings a spike in returns. Now that the government has relaxed restrictions around store closures, many non-essential retailers are facing new challenges.
A key part of all retailers' recovery plans will be ensuring your stores are 'Covid secure' in time for re-opening. There's some superb collaboration across the sector at the moment, with food retailers sharing their experiences of operating during lockdown to inform the implementation of appropriate processes and measures across those areas of retail which have had to endure closure.
You will want to ensure customers return to shops feeling safe and welcome, but you should also consider future store layout and stock rotation in light of post-lockdown instore behaviour – customers visiting stores will probably be more focused and, certainly initially, are unlikely to spend time browsing aisles and racks in the way they did before the pandemic. This change in activity could mean you choose to position products and promotions in a new way to maximise the chance of customers still making those impulse purchases.
Whilst maintaining the highest standards of safety and making changes in line with instore behaviour, retailers are also faced with the pressure if handling returns effectively. One of the initial challenges retailers face is that consumers will potentially not be returning to stores to purchase new goods but to return pre-lockdown purchases, so retailers need to consider their returns policy.
Under UK consumer law, customers are entitled to a cooling off period of 14 days for any online purchases. This allows them to return any item purchased via a website if they change their mind within this initial window of time, provided they haven't used it. The position is different if customers buy items in-store, where no such cooling off period exists – in these circumstances customers are deemed to have fully inspected the item prior to buying it (and in the fashion sector, they've probably had an opportunity to try items on) so their rights to return purchases only cover defective or unsatisfactory items. Nevertheless, most retailers will accept returns of in-store purchases if a customer changes their mind, usually within 30 days of the date of purchase, as long as the item remains in its original packaging with labels attached.
The legal position on this hasn't changed under the recent Coronavirus Act 2020, but a number of retailers are offering extended return periods due to store closures and insufficient staff levels to handle the volume of products being returned. As a retailer it is worth considering maintaining this level of flexibility as you build up your returning workforce. This will ensure employees are not immediately overwhelmed with activity and it will also help to preserve customer loyalty and avoid negative PR. However, adopting this approach does come with some risks.
Offering extended returns policies leaves retailers open to the risk of losing hard earned revenue by accepting items back over a longer window of time, because inevitably returns lead to refunds. At a time when income is critical to the survival of some of our well-known high street brands, as a retailer you may decide not to honour flexibility for returns for any longer than is absolutely necessary, and there's nothing to stop you doing this.
Reverting to your pre-lockdown returns policy will also deter customers from trying to return purchases they made before 23 March 2020. The pandemic has made many consumers consider their long-term spending habits, and some may seek to top up their personal finances by returning unwanted impulse purchases or items which are no longer required, such as holiday essentials or a new outfit for the office – the concept of 'reverse buying', recently coined by the media. Consider setting a long stop date for returns relating to pre-Covid 19 purchases to manage your financial risk of having to honour any extended returns policy you've offered during lockdown.
As non-essential retailers cautiously re-enter the world of consumerism on our high streets, it is important that they continually review and update their recovery plan in light of changing customer beahviour. And as for my approach as I emerge from lockdown? Alongside many other consumers I'm sure, I am keen to support the brands I feel most loyal to so that they successfully navigate their way through these challenging times, and I will be dusting off my handbag to venture out…or perhaps this is a good excuse to buy a new one?!