With most offices closed due to the ongoing coronavirus pandemic, working from home has become the norm for many. Retail Week analyses whether the pandemic will finish off the traditional retail head office.
- Pets at Home CEO Peter Pritchard says head offices will become “places to meet, congregate and work in groups where appropriate”
- Head offices could be scaled down or replaced with regional hubs as more staff choose to work from home on a permanent basis.
- Social distancing requirements will mean a rethink of office layouts resulting in potentially less-efficient spaces to operate and further costs incurred for daily deep cleaning.
- Retailers will be able to cast their nets wider when recruiting for managerial roles, with flexible and remote working enabling candidates from other locations to be considered.
Twitter announced that it would allow staff to work remotely permanently earlier this month.
As one of the first companies to send its entire, 4,600-strong global workforce home as coronavirus spread across the world, it was also the first to recognise the changed role of the head office.
Twitter has since been followed by other tech giants, including Facebook offering staff the option to work from home forever and Google allowing employees to work remotely until the end of the year.
However, tech businesses like these have long had a reputation for providing flexible working environments.
Other business sectors with once strict and rigid office hours – ranging from banking and finance to engineering and law firms – have also discovered that their employees can work effectively from home.
But how will this impact retail?
The new normal
Research from retail recruitment firm Oresa shows that the pandemic has prompted a big shift in retail directors’ attitudes towards home working and the future of the head office.
The data found that 60% of c-suite respondents believe that working from home in the future will become a right for all office workers. While 73% of retailers surveyed believe that some form of head office will be retained in future, 65% say its purpose will change and 73% say they wouldn’t personally attend as often.
Oresa chief executive Orlando Martins says retail bosses have been “pleasantly surprised” by how efficiently many roles can be done remotely, but they miss what he calls the “softer influences” that come from face-to-face interaction.
“Many have found they are missing the interactions from the office – the chance conversations, the interactions that lead to new ideas,” he says.
Pets at Home chief executive Peter Pritchard says the coronavirus pandemic has “changed life forever” generally and the role of the head office specifically.
“Those colleagues who have the ability to work from home will be able to [on a long-term basis], as we’ve got the tools and capabilities to allow them to do so,” he says.
“This, in turn, will lead to a change in the function of the head office. People will start to use offices as places to meet, congregate and work in groups where appropriate,” he says.
“People will start to use offices as places to meet, congregate and work in groups where appropriate”
Peter Pritchard, Pets at Home
Ultimately though, for Pritchard, some form of head office will always be needed as “the thing most people miss is the social interaction”.
However, not all staff have found working from home easy. The chief executive of one clothing retailer says that while many functions such as IT and finance have easily adopted remote working, more creative teams have struggled.
“We’ve been trying to do a range review on Zoom and it’s very hard if you can’t touch and feel a product. For buying and merchandising it is quite hard to not be together dealing with samples coming in and out all the time, that sort of lends itself to office-based work,” he says.
Fewer people, less space
If the head office is fated to become a place for meetings, either with clients or between teams, rather than for general work, the need for large offices will likely decrease.
At a time when many retailers are struggling with cash flow, cost-cutting is high on the agenda.
Property adviser Jonathan De Mello thinks the axe will fall on head offices and firms will look to reduce space.
“If you need fewer staff on-site, and are promoting more flexible working, that will affect the sorts of property that you’ll need. You’ll need less and more flexible space,” he says.
“A central London prime office space will likely just be a place for meeting with clients going forwards or important meetings where everyone has to be ideally present in person.”
Martins agrees: “My conclusion from discussions with senior retail executives is that a lot of companies will significantly reduce head office space.”
“If you need fewer staff on site, and are promoting more flexible working, that will affect the sorts of property that you’ll need. You’ll need less and more flexible space”
Jonathan De Mello, property adviser
De Mello suggests that many retailers will look to sell and then lease back their head offices if they own them outright, much like Ted Baker recently did with its Ugly Brown Building in London.
While this will involve lengthy negotiations with landlords, De Mello sees a future where retail businesses even look to adopting regional hub offices for meetings rather than having one large central headquarters.
“If people are working from home more, retailers could migrate to regional offices, which are much cheaper. If you think of the cost of a central London office versus one in almost any other part of the country, outside of major cities, it’s massively different per square foot.”
Martins says that the only major requirement for future head offices will be adequate video conferencing facilities and good internet connections.
Office layouts will also need to radically change to reflect the new purpose of the office.
“There’s no point coming into an office to sit at a row of desks doing what previously was done. The point of being together is to get things done efficiently, not have someone watching over your every move. Offices are not Victorian factories,” he says.
One fashion chief executive is exploring reconfiguring its office layout. “We’re looking at changing the space and re-evaluating what we need from that space and doing things that we’ve never really had to do before,” she says.
Social distancing rules will also require changing the office layout.
“The rows on rows of desks are going to have to be either more spaced out, to prevent staff coming into contact with each other, or even turned into more distanced, standalone working areas. This is going to make those spaces less efficient to run”
Jonathan De Mello, property advisor
“The rows on rows of desks are going to have to be either more spaced out, to prevent staff coming into contact with each other, or even turned into more distanced, standalone working areas,” says De Mello. “This is going to make those spaces less efficient to run.”
Daily deep cleaning and other sanitisation measures will also be necessary, which De Mello says will increase the cost of operating offices further.
“Ultimately, all these factors mean the justification for running expensive offices will be lower,” he says.
More remote working could change retailers’ recruitment priorities.
Martins points out that managing staff has become a more time-intensive process remotely, which may put some businesses off hiring junior and mid-level candidates.
“Allowing people to work from home more is going to be an indicator of the level of trust that organisations have in their people,” he says.
However, he suggests that flexible working could help retailers that once struggled to attract top managerial talent due to their location.
“If you only need to be in head office one or two days a week, that will actually increase and improve the potential level of talent that certain organisations can attract”
Orlando Martins, Oresa
“Ten years ago, if you were interviewing someone for a role outside of where they lived, one of the conditions would be the need to relocate. Over the last decade, and five years particularly, that has already lessened substantially.
“Coronavirus is only going to further enhance that. If you only need to be in head office one or two days a week, that will actually increase and improve the potential level of talent that certain organisations can attract,” he says.
This could help retailers based outside of big cities like London and Manchester attract staff that would be put off based on location. It also opens the possibility of hiring people based outside of the UK in the future.
As we enter our third month of lockdown, it’s clear that how we work has changed forever. As we gradually reopen both stores and offices, the places where we work will have to change too.