Furlough cliff edge poses tough decision for retailers

Many 'non-essential' retailers are in the thick of restart planning. One of the big issues is clearly a complete lack of visibility on what customer demand levels will be in stores as the UK emerges from lockdown. Most are predicting a slow and fluctuating demand curve that may never reach the levels seen pre-crisis. Shoppers will either transfer trade online or simply stop spending as the recession bites.

This leads to the key discussion around the when/if/how stores should be reopened. How to do this profitably when demand is so unpredictable? How many stores should we open and how to stagger openings/restrict opening hours? Are there stores which we should just never reopen? Etc. 

Store labour costs play a big factor in this decision. The Furlough scheme has undoubtedly saved many jobs but when it ends, it is highly unlikely that it will make economic sense for all those workers to immediately return full time on previous salary levels/hours. Actually, unless some kind of government backed phased approach is adopted (as suggested by this article) the cliff-edge will force retailers to make more redundancies and close more stores to be sure to avoid a cash crunch. The alternative is significantly reduced hours/greater flexibility from the store staff, unwelcome but perhaps inevitable in these unprecedented times. 

It is likely that flexibility and investment by both the government and the retail labour force will be necessary.