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Risk in Context

Retail and hospitality: Taking practical action in the face of COVID-19

Posted by Ron Tomsic April 22, 2020

New realities created by COVID-19 are dramatically impacting companies operating in the retail and hospitality industries. The range and pace of change is unprecedented. Some businesses are re-defining their customer offerings, while others are fighting for survival.

The sector is facing into extreme headwinds. Retailers selling “essential” goods are striving to maintain product offerings around the clock and limiting the number of items each customer can purchase, whilst the majority of other retailers are facing huge impacts arising out of the Australian Federal and State Governments’ restriction directives, which include (accurate at the time of publication):

  • Stores are required to put a notice in their front window advising how many people are allowed inside at any given time.
  • Pubs, licensed and registered clubs, casinos, cinemas, indoor exercise facilities and places of worship are closed indefinitely.
  • Food courts, beauty salons, swimming pools, gyms, libraries and community halls are also being closed.
  • Restaurants and cafes are only allowed to provide takeaway services.
  • Social distancing measures are required for all retail stores that remain open.

We are all adjusting to new realities created by store closings, workforce reductions to decrease costs, and unprecedented government interventions.

Taking a Practical Approach 

While few businesses could predict the total impact of this pandemic with any certainty or accuracy, there are practical steps that can be taken immediately:

  • Workplace Health and Safety: First and foremost, employers have a duty to ensure that they are taking any necessary steps to protect their employees and customers. Social interaction guidelines, health advice, childcare support, new communication activities, and homeworking guidance all feature highly. Employers need to be particularly mindful of increasing levels of frustration at the unavailability of stock and be prepared to support their employees who are facing increasing verbal assaults or physical violence.

Safe Work Australia has provided useful COVID-19 specific guidelines on:

  • Managing risks in the workplace
  • What to do if a worker has COVID-19
  • Working from home
  • Information for workers
  • Worker arrangements
  • Business resource kit
  • Mental health
  • Workers’ compensation

Food retailers should take immediate actions to limit virus transmissions. These include cleaning stores thoroughly, limiting contact with associates, increasing express pickups and online orders, moving to contactless payments, and using disposable bags and cups. Customers need to be able to continue to shop at their local grocery stores with the confidence of knowledge that health and safety compliance is the bedrock of solid store operations.

  • Supply Chain: Measures against virus transmission are also needed in supply chains. Fortunately, these have long focused on minimising “touches” — something that will help manage the spread of an infectious disease. A high degree of mechanisation will keep goods out of people’s hands, reducing risk. Retailers should also carry out a rapid end-to-end supply chain evaluation: How are pallets built? Do they have enough trucks on the road?
    In addition, retailers can rethink the splits of warehouse shifts and reduce hours worked in stores, so that restocking can take place with fewer people in stores at any given time to avoid crowds.
  • Crisis Planning and Management: Response teams will be defining and implementing new business models while managing myriad resourcing challenges. Flexibility and nimble decision making is a prerequisite to overcoming supply chain constraints, demand shocks, and rapidly changing consumer buying habits.
  • Loss Management and Measurement: It is vital to set up processes to quantify and measure trading reductions (or increases) to support re-financing, investor expectations, and claims. Assessing opportunities to pursue recoveries from insurers, government, or suppliers will be critically important.
  • Supporting Recovery: This phase will typically involve financial modelling, refinancing, further business model changes, volume upscaling, workforce expansion, and training. All these efforts may need to be supported by innovative social media campaigns and brand re-positioning efforts.

Organisations who take action today to invest in strategic, operational, and financial resilience will be best positioned to respond to and recover from the COVID-19 pandemic's impacts on their employees, business, and bottom line.

To read more on how food retailers can make meaningful connections with customers through safely stocking of stores, innovative produce packaging, repurposing promotions and new ways to engage with customers in addition to traditional in-store communications, please download our sister company Oliver Wyman’s latest report Risk Journal in the Time of COVID-19: More Risks, More Unknowns

Ron Tomsic

National Client Development Leader

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