As coronavirus takes its toll on economies and businesses across the globe, Retail Week brings you regular dispatches from international retailers and experts, who provide their insights into how they are coping with the pandemic.

Richard Simonin

This edition features a Q&A with retail veteran Richard Simonin, who offers an insight into life in Italy – one of the markets the UK is monitoring closely as it emerges from lockdown.

This article first appeared in issue three of the World Retail Congress report The Retail World 2020: Retailing in a time of crisis.

After almost two months of lockdown, Italy is relaxing the guidelines. Is the country ready for this important next stage?

Initially, it seems to me that May 4 was much too early. We are seeing constant and significant improvements in Italy, but key indicators are not demonstrating at all that the pandemic is fully under control. Two weeks ago, I was extremely concerned that this rush could trigger a huge and hardly manageable second wave of the infection.

But it is clear the Italian government is desperate to restart the economy and has been issuing many rules and recommendations that I believe shows a lack of preparation and coherence. For example, most industries could reopen on May 4, subject to implementing strict hygiene and health protection measures. Workers can use public transportation, but as of May 2, the hygiene and social distancing measures were not finalised. Masks and gloves will be compulsory, but it is not clear at all if they are going to be available, when, where and at what price.

What guidelines for retail for easing of the lockdown have been announced and do you think they sound practical?

All retailers will be able to reopen on May 18, subject to R0 being less than 1, and subject to implementing the now usual health-protection and social-distancing measures.

Malls are going to be authorised to re-open under conditions which are still being discussed. Bars and restaurants will be able to re-open only on June 1 under conditions still to be defined. This date will be postponed if R0 goes over 1.

But the reality is that for 10 weeks, pure bricks and mortar players have had no turnover at all. For bars and for 80% of restaurants, if they reopen on June 4, we are talking about 12 weeks with zero income. Omnichannel retailers have seen a significant increase in their online activity but, as far as I know, none of them has been able to compensate the missing sales that would usually be coming in from their stores.

The consumer mindset has already changed and will continue to do so for a while. To survive, retailers will need to adapt to significantly lower turnovers. Shop closures, bars and restaurant closures will contribute short and mid-term to high unemployment rates with inevitable social consequences.

The key issue is how many retailers have a balance-sheet that allows them to overcome this disruption. If cash was king before Covid-19, it has now become Emperor.

From what you have witnessed of retail in Italy, what do you believe the key priorities are for retailers to focus on?

We are in completely unknown and unchartered territory.

There are important short-term questions around the supply chain and how many shops to close – 25%, 30% or more? – with all that means for headquarters and logistics facilities.

Then, it is vital for retailers to assess their omnichannel capabilities, knowing that in most cases they have been underinvesting, and will now have to find the resource to increase massively their investment in order to close the gap.

There is no existing roadmap for this. It will be about great teams with a broad variety of skills. The name of the game is going to be about flexibility and agility combined with strict cash management.

As vice-chair of the luxury group, Al Tayer, in the UAE, how does the European retail and leisure experience compare with the situation in Dubai?

The United Arab Emirates has a significantly smaller population than Italy, but it’s still interesting to compare how things are handled particularly in Dubai.

Lockdown measures started on March 16 with bars, then followed by malls and most of the offices on March 24.

A first round of stay at home measures were imposed on March 26 with restaurants and beaches being locked down from April 4 onwards. Stay-at-home measures became very drastic on the same day. Public transportation was stopped completely.

The first lockdown release happened three weeks later, on April 25. Public transportation has gradually been reopened since April 26 but under very strict conditions.

Malls have been reopening since then with limitations to 30% of their capacities, no access granted to people aged 60 years old and above, or to children between 3 and 12 years old. Temperatures are checked at entrances and shoppers cannot stay in a mall more than three hours.

One can say this is not so different from the progressive European lockdown measures. In reality, the results are significantly different. In the UAE, the progression of the pandemic has effectively slowed down.

Drastic lockdowns followed by straightforward but slow releases under a few and unambiguous rules are, in my point of view, paving the way for a consistent and faster economic recovery.

The Retail World 2020: Retailing in a time of crisis

WRC issue three front cover

Retailers across the globe are facing their greatest-ever challenge as the pandemic grips every country. How are retailers coping and responding to the needs of their customers, communities and the business itself?

Hear from retailers and experts from around the world in the fortnightly report from World Retail Congress. The third issue is available to download in full here.