Keeping the wolf from the door

Despite online being initially viewed as something of a saviour for ‘non-essential’ retailers forced to close their stores the reality has been more painful as many have been unable to operate online.

A combination of issues over social distancing in warehouses and subdued demand for products within various categories has made it tough for many retailers to make trading online stack-up morally and financially.

This is clearly problematic and a growing number of companies have tentatively begun to open up their online stores after making changes. These have included modifying warehouse practices, extending delivery windows, reducing the ranges available online, limiting order sizes, and limiting orders to existing customers.

Among those opening up online is shoe retailer Schuh, which made the move because it deemed it critical for the survival of the business. It will now start a staggered reopening of its online fulfilment operations after a formal risk assessment was completed in its warehouses.

Such tough decisions are being made across the sector just like they are in the leisure and hospitality industry where most businesses initially closed their dine-in offers and provided only take-away and home delivery options before backtracking and closing things down completely. A growing number of them have since re-opened having made the necessary changes to their operations.

As Peel Hunt highlighted in recent note, liquidity and cash flow are the key metrics for the retail industry right now. Bringing in cash from online operations while stores remain closed could be the crucial survival factor for many businesses. It points to the fact that retailers will need to shore up their balance sheets ahead of the late summer working capital peak. For many in the sector that will feel like a very long way off in the knowledge that some very rough terrain will need to be encountered before then.

Glynn Davis, editor, Retail Insider