What Does RTO Mean For All Our WFH Dreams?
(Bloomberg Opinion) -- What if we can’t work from home forever?
Over the last year, countless decisions have been made on the assumption that remote working will be dominant even after Covid. People moved out of city centers, bought houses with office space, adopted pets, stocked up on Pelotons and replaced refrigerators. Retail companies, meanwhile, adapted their strategies to cater to these homeworkers by closing stores, expanding their websites and offering more loungewear.
But as employers call people back to offices, the idea of a wholesale shift to working from home is starting to wane. Companies are going to have to quickly adapt again.
Fortunately, a few consumer businesses are finding a way to capitalize on both urban and suburban growth. Retailers such as sandwich chain Pret a Manger Ltd. might be a model for how to serve remote workers while being flexible enough to cater to those returning to office life for at least a part of the week.
There are already signs that this partial return is underway. Bloomberg’s Pret Index, which tracks transaction volumes in its British cafes, shows more than half of workers in London’s financial districts may be back in the office at least three days a week. In the U.S., Macy’s Inc. is seeing sales of men’s tailored clothing recover. Pets adopted in the pandemic are being returned to shelters. And life is coming back to London’s property market.
Nevertheless, a mass return to the office is probably still some months away, depending on vaccinations and variants. And Pret is a useful example of a company that looks prepared to manage this prolonged twilight zone between WFH and RTO.
For years the U.K.-based chain pursued a “follow the skyscrapers” strategy, opening eateries close to where people worked. But even before the pandemic it had begun exploring more suburban locations. The cafes it has opened outside of central London — in residential districts such as Clapham, Tooting, Richmond and Kingston — are doing well. Now it’s doubling down, looking to add sites in similar areas surrounding London, Manchester and Birmingham. Although it announced last summer that it would close 30 U.K. cafes (and 17 in the U.S.), it still has outlets in office-heavy locations, such as the City of London, Canary Wharf and midtown Manhattan.
In the U.K., Pret is also trialing shops within Tesco Plc supermarkets. It’s a smart strategy. Greencore Group Plc, which supplies food retailers, says homeworkers are now popping out for lunch more often. Why not grab a sandwich at your most convenient grocery store? And if these people return to the office en masse, Pret can simply rein in the trial.
Other urban chains should take note. In the U.S. Starbucks Inc., Shake Shack Inc. and Chipotle Inc. responded to the pandemic by announcing plans to open outlets outside of city centers and expand drive-throughs. But any new suburban locations need to be popular enough to cope with a shift back to offices.
Another pandemic consumer-industry strategy has been offering different kinds of services in locations closer to where people live. So far these outposts are doing well, but retailers will have to watch them closely as commuting picks up to see whether shoppers still need them.
For example, Nordstrom’s seven local outlets in Southern California and New York City — introduced before Covid but since expanded — act as pick-up and return points for online orders (handy for preventing porch pirates) and provide services such as clothing alterations, styling and gift wrapping.
In the U.K., supermarket chain J Sainsbury Plc has opened five “neighborhood hub” outlets in affluent commuter areas such as Staplehurst in Kent and Bishops Waltham in Hampshire. At least twice as big as a typical convenience store, these offer home and beauty items and serve as collection points for Sainsbury’s Argos division, bakeries and pizza counters.
What about all those companies that closed physical stores and tried to focus on online ordering? Although digital shopping isn’t going away anytime soon, one reason for its surge is that people have been home during the week to receive parcels. Once they’re back in offices, nearby brick-and-mortar shops might be more convenient than trying to time a delivery.
Take Britain’s John Lewis Partnership. It’s closing six department stores, including locations in the center of Birmingham, the U.K.’s biggest city after London, and in Aberdeen in Scotland. If workers return to Birmingham’s banks and law firms and to Aberdeen’s oil and gas companies, shutting these stores may look premature.
And there’s another dilemma for retailers amid the current uncertainty. They need to be placing orders now for the fall, when more people are expected to return to offices and schools. They’ll have to make some hard decisions about whether to stock up on blazers and rucksacks, or sweatpants and coffee machines.
That’s just one more challenge for consumer goods groups as they navigate the shifting sands of work from home, return to office and the lingering Covid threat.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.
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