The next phase of retail



April 20, 2020

Retail Alert

Author(s): Staci Jennifer Riordan, Brian V. Alcala, David A. Kaufman

The guidelines for the loosening of the restrictions on retail in Texas are one path forward for the next phase of retail—but will they work across the country and around the world?

On April 17, Texas Governor Greg Abbott issued an executive order that started the reopening of the Texas economy. The Texas order focused on allowing “non-essential” retail businesses to once again operate. The guidelines for the loosening of the restrictions on retail in Texas are one path forward for the next phase of retail—but will they work across the country and around the world?

The order and guidance

The governor’s order lays out the framework for retailers to again serve their customers—but in a very different way than the traditional brick-and-mortar format. The order allows “retail services that are not ‘essential services,’ but that may be provided through pickup, delivery by mail, or delivery to the customer's doorstep in strict compliance with the terms required by DSHS.” (Texas Department of State Health Services)

Texas DSHS issued additional guidance to employers, employees, and customers of these specifically “non-essential” businesses. The three options these non-essential retailers have to reopen are:

  • Retail to-go
  • Retail delivery to customer’s doorstep
  • Retail delivery by mail

The guidance encourages retailers to limit human contact in making the payments—“should be done over the phone or internet if possible, and contact should be minimized if remote payment is not available.”

Retail employees

The DSHS order also lays out guidelines for employment in these retailers, including the use of screening, face coverings, and sanitation procedures.

  • All employees must be trained on environmental cleaning and disinfection, hand hygiene, and respiratory etiquette.
  • All employees must be screened before coming into the business for new or worsening cough, shortness of breath, sore throat, loss of taste or smell, feeling feverish or a measured temperature greater than or equal to 100.0° Fahrenheit, or known close contact with a person who is lab-confirmed to have COVID-19. Any employee who meets any of these criteria should be sent home.
  • Upon entering the business, employees must wash or sanitize hands.
  • All employees must wear face coverings.

Employees must maintain at least six feet of separation from one another.

The next phase?

Is Texas a model for opening up retailing around the country? If so, how should retailers prepare for this next phase?

  • Traditional “in-store” shopping may be slow to return even as the economy starts to open up. Retailers need to be prepared for a continued environment of restricted entry rules and cautious customers not wanting to come into their stores.
  • Payment will continue to move online. Brands need to upgrade their online portals, including mobile platforms and applications, to ease the use by customers. Note this may be challenging in some locations, like San Francisco, that prohibit solely credit-based transactions, unless those regulations are temporarily suspended in light of the health crisis.
  • Retailers need to consider the logistics and procedures needed to facilitate customer pick-up from stores. This includes both associate training/protocols and store facilities. Does the customer have an easy access point to the store? How will staff know the customer arrived? What procedures will be followed to put goods in a customer’s car? Can a customer “check” an order? What do the return logistics look like?
  • Employee screening and sanitation procedures would significantly alter staff management for many retailers. The effective application of these new guidelines likely requires additional consultations with experts in employee safety and employment lawyers to implement, including when to compensate employees for time spent screening and sanitizing.
  • Employees will need to be provided with protective gear—at least gloves and masks and maybe more depending on the local regulations. How will your business obtain these required supplies, when first responders are still having issues obtaining sufficient quantities?

While the Texas model does offer a possible path to reopening retail stores around the country, companies need to evaluate these new procedures and protocols to ensure their business can efficiently and effectively adopt a new and drastically different, for some, business model. While the precautions should help reduce the spread of coronavirus, what about the additional transactional costs in a post-quarantine world? Will those be passed on to the consumer? Or will they be cost-prohibitive, making businesses likely to stay shut in the short run? As this scenario plays out in real time, other states and countries will have to decide if Texas’s path forward is the right fit for them.

The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

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