Sorry ma'am that dress is in quarantine: How clothing stores are prepping for a strange new reality

Aritzia Inc. chief executive Brian Hill describes a visit to one of his stores as a luxury experience, one that he's spent years building at the Vancouver-based women's fashion retailer.

Most locations have an earthy design: the walls are lined with wooden panels, ferns are scattered throughout the store and mini terrariums are nestled on top of cashier counters made of rocks and minerals. There's ample floor space between the $198 cashmere sweaters and $230 blazers that his style advisers pick out for customers.

Even the way Aritzia's employees operate is different. Hill wants them to make a personal connection and is ecstatic when he hears they're texting or emailing customers outside the retail space.

It's chic and personal, which is what draws new shoppers in and keeps the regulars coming back.

Of course, no one has visited in the past couple of months because Hill had to shutter his stores due to COVID-19, but he is now in the process of reopening them. The first two — in Houston, Tex., and Winnipeg — opened their doors last week.

Aritzia will have to abide by the health restrictions that various governments put in place when it reopens, which means Hill's carefully crafted luxury experience is staring down change. So, too, are the classic shopping norms that consumers know and love, since everything from the use of fitting rooms to being able to touch products displayed around a store is being re-examined.

"It's super important for our customers to come in and feel safe and for us to ensure our workers feel safe, but we don't want to lose that everyday luxury experience we have in our stores," Hill said. "As a leader in the industry, we can't be putting restrictions on people and doing things such that the whole joy of the shopping experience isn't there anymore."

Restrictions attached to reopening will differ from province to province, and some have already provided their outlines that signal big changes for retailers.

In Manitoba, stores can only be filled to 50 per cent of their capacity, while New Brunswick is asking retailers to install plastic shields for cashiers and to place floor markings for line control and direct one-way traffic.

Alberta's government suggests retailers develop strategies "to minimize the handling of retail items," including making changes to the way people try on clothes and return them. That might mean shoppers will have to use hand sanitizer before trying on clothes and that they may not be allowed to return them once purchased.

In some cases, though, retailers are going beyond what government guidelines suggest.

For example, Walmart Canada, which has remained open throughout the pandemic because of the essential items it sells, shut down all its change rooms. The retailer also hasn't accepted returns on clothing since March 20.

Some smaller retailers that have already reopened in British Columbia are requiring customers to make an appointment as a way to ensure traffic levels remain low.

Hill said his customers visit Aritzia stores because they want a personal connection, including the one with the clothes they're eyeing. He's going to follow government guidelines, but said it's up to him and his team to figure out how to do so without stripping them of the opportunity to make that connection.

"We can be doing all these things and creating social isolation, but still have an incredible shopping experience in our stores," he said. "That's what the task and challenge at hand is for us as a retailer."

Of the provinces with set guidelines, Saskatchewan's appear to be the most detailed and likely present Hill and other retailers their biggest challenge.

Initially, the province wanted to eliminate change rooms, but settled on retailers making every other one vacant and disinfecting those that are used after each customer is finished. Returns were also set to be banned, but now must be quarantined for 72 hours before they're put back on display. The same might apply to clothing that's been tried on.

It's clear the Saskatchewan government wants to eliminate as much of the tactile connection in stores as possible. It suggests that customers shouldn't touch any items they don't intend to buy and signs should be posted around the store to remind them. Any table or shelf displaying items in bulk will need to be disinfected after each customer touches it or be staffed by an employee who can hand items out.

This kind of near-touchless experience may end up resembling a showroom, said Matthew Teeple, who covers Canadian apparel and footwear for market researcher NPD Group. For example, instead of customers digging through clothing racks, which often attract high traffic, they may need to ask a salesperson to do so.

"It will be a more curated experience," he said. "To control multiple people simultaneously within a store and not have them touch anything is likely unrealistic, but it may be one area that they can embrace to make them more comfortable."

Robert Burke, chief executive of New York-based consultant Robert Burke & Associates, thinks some retailers may even begin to book appointments to use their fitting rooms or to take customers into a private area where they can browse certain collections.

But he said shoppers must be allowed to continue to use change rooms and return items, because both are critical for the industry. Without them, consumers would be more hesitant to shop, which would likely result in another dip in sales.

Further sales declines would be problematic for most clothing retailers, many of which were already struggling before the economic shutdown.

J. Crew Group Inc. became the first major retailer during the pandemic to file for bankruptcy and Neiman Marcus Group Inc. followed shortly after. J. C. Penney Co. Inc. and Lord & Taylor are reportedly considering making the same decision. Footwear retailer Aldo Group Inc. is also now seeking bankruptcy protection.

Aritzia is in a stronger position than most. Before the shutdown, 2020 was shaping up to be a record year for its stock. The share price shot up 37 per cent in the first two months of the year and hit an all-time high in February.

As of the end of its third quarter in January, Aritzia also had close to $100 million in cash on its balance sheet and that, coupled with its already strong position in e-commerce, are likely why it has been able to avoid furloughing or laying off any employees.

If they do go out, they're serious about making a purchase and they're making more and higher purchases than before

Robert Burke, chief executive of New York-based consultant Robert Burke & Associates

It's the luxury retailers that Burke expects to rebound the quickest once stores reopen.

A specialist in retail and fashion, he has been working with Taubman Centers Inc., a U.S. real estate investment trust that has interests in malls, including ones in Xi'an and Zhengzhou, China. Both have been open for more than a month and he believes the trends he's noticed in the luxury space will be duplicated here.

Kering SA's Gucci, Chanel SA and LVMH Moet Hennessy Louis Vuitton SE each had long lines stretching outside their stores when they reopened in China, Burke said. These retailers have some of the strongest sales in the luxury group: two weeks ago, they were only running 10 per cent behind their sales figures in the same time period in 2019.

Part of the reason could be related to another pattern Burke has noticed. Although fewer people are leaving their homes to visit malls, those who do are spending more. It helps that the consumers who can afford luxury goods are likely the ones least affected by job losses in the economic shutdown.

"If they do go out, they're serious about making a purchase and they're making more and higher purchases than before, so there's some encouragement," he said. "But you're not going to have the volume."

The lack of volume and traffic, whether brought on by government enforcement or fear, is a problem for mass-market retailers, said Sandrine Devillard, senior partner at McKinsey & Co., who is consulting with retailers on their reopening plans. The average cost per item in these stores is much lower so they rely on a higher number of individual sales.

"In a fixed-cost business, it could be hard to make that money work," she said. "The more you rely on traffic, the more those measures will have a damaging impact on you."

Apparel retailers outside the luxury space are already experiencing a "double negative effect" in China, Devillard said. The number of transactions are down 46 per cent and the basket size of customers has fallen by 23 per cent. About 40 per cent of apparel retailers won't have sufficient operating cash in the next quarter, she said.

Hill said Aritzia won't be in that position because the break-even point of each store is relatively low, allowing it to be profitable with even 50 per cent of its regular traffic.

The retailer has also been introducing new collections throughout the lockdown, which might leave it in a position of strength when its brick-and-mortar stores reopen. Teeple and Burke suggest other retailers will have to make do with what they already had on display in early March for up to eight weeks until clothing for the next season finally makes its way into each store.

Nevertheless, it's still unlikely that Hill will open all his stores as soon as he's given the green light. He's thinking of a more staggered approach that would prioritize the larger, most popular stores in his chain first.

This strategy will allow him to ensure that restrictions are also in place for his employees, who will also be affected by the changing retail experience.

Hill plans to model some of the new guidelines after those used at his distribution centres, where he said there have not been any positive cases of COVID-19.

Employees will be asked questions every day before their shifts to ensure they don't have symptoms and they will have their temperatures checked with the help of health and safety advisers in stores. They'll also have to keep their distance from shoppers and, depending on the province they work in, disinfect change rooms, shelves, tables and clothing racks.

There hasn't been a decision about whether they'll have to wear gloves or masks. Hill wonders whether doing so will make his customers feel more or less comfortable in stores. The same goes for other potential guidelines. He can prepare to implement all of them, but there's no way to know how shoppers will react to the new environment.

"We can only control what we can control," he said. "We're ready to go with our spring-summer collections, we're ready to go with our customer service, we're ready to go with our stores, we're ready to go with our fall collection, from our perspective it'll take days and weeks before we're up and rolling. How the consumer reacts is a different story."

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