Costco is bringing back free food samples. Target is accepting customer returns on all merchandise. And Kroger is returning to its pre-pandemic store hours at some locations.
Stores that were deemed “essential” and kept their doors open throughout the coronavirus pandemic are now taking steps to return to normal. The changes may be welcomed by customers who miss the conveniences of daily life pre-pandemic. But some worker safety experts, epidemiologists and labor groups warn that these companies are prematurely relaxing the safety measures they enacted in March and April to prevent the coronavirus from spreading.
Last week, New York City allowed retail stores to set up curbside pickup for the first time, and California permitted schools, gyms, movie theaters and bars to reopen with modifications. Some states like Georgia reopened nail salons, massage therapists and bowling alleys as early as late April.
More than 100,000 Americans have died from the coronavirus, and some states are seeing sharp increases in new cases. The stock market has dropped in recent days over fears of a second wave of the virus.
The safety measures retailers are rolling back are “good practices for preventing both Covid-19 and future pandemics,” said Brandon Brown, an epidemiologist at the University of California, Riverside. “We should keep simple prevention measures such as these in place as long as possible as we move towards reopening the economy to ensure a new wave of infections does not force us to again shelter in place.”
Retailers say they are responding to a patchwork system of reopening rules around the country and are making changes based on shifting guidance from local and state officials. There are no federal requirements for how or when “essential” stores should ease safety policies related to the coronavirus.
Costco (COST) is “trying to get back to normal, as areas around the country are trying to do the same,” Richard Galanti, the company’s chief financial officer, told CNN Business.
The company this week started bringing back free food samples in a handful of stores and plans to roll them out to additional locations in coming weeks. Galanti said the samples are pre-packaged and the company is weighing whether to put up acrylic glass barriers in front of them.
Costco is also loosening restrictions on the number of people members are allowed to bring with them during shopping trips.
Meanwhile, a spokesperson at Midwest grocer Hy-Vee said that “as the eight-state region that we serve begins to ‘open’ back up, we are expanding the times we are open and returning to normal store hours at many of our locations.”
A spokesperson for Target (TGT), which has reopened Starbucks (SBUX)locations in some its stores, said it is taking “a careful market-by-market approach, and in some cases store-by-store, to ensure we prioritize the health and safety of our team and guests.” Starbucks (SBUX)at Target (TGT) stores offer drinks and other items to go and “follow all of the current safety measures within our stores.”
The incentive to go back to normal
Stores have strong financial incentive to return to regular procedures, retail analysts said.
While “essential” chains have reported sales increases as consumers stock up on food and other items they need, the costs of operating in the pandemic have weighed on their profits.
“These retailers established safety procedures and protocols quickly for their operations, so now they are likely trying to find extra revenue and margin by relaxing controls wherever they think they can,” said Chris Walton, a former Target executive and founder of consulting firm Red Archer Retail.
Costco’s profit fell 8% in the quarter ended May 10 from a year ago, hurt by coronavirus-related wage and sanitation costs.
And while there’s been a boom in online orders, digital sales are less profitable because companies have to pay for logistics and delivery fees.
Target’s profit last quarter fell more than 60% from a year ago in part because of higher supply chain costs from fulfilling online orders and labor costs. That’s despite digital sales surging 171%.
“There’s a collective and growing recognition that [retailers] are likely falling well below pre-pandemic profitability levels as a percentage of sales,” said Doug Stephens, founder of consulting firm Retail Prophet. “They need more in-store sales across categories — not just grocery and not just online or click-and-collect. They want feet through the door.”
Safety and public health experts say they are alarmed that chains are taking any steps to return to normal, noting that store employees still face exposure to the virus working in tight quarters and come into close contact with hundreds of shoppers a day.
Peter Dooley from the National Council for Occupational Safety, a worker safety advocacy group, criticized Costco and Kroger for expanding their hours and Costco for allowing more people into stores. He also said that Target allowing customers to return “un-screened materials” was a risk to workers.
These companies’ relaxing of policies “will expose workers, customers and the general public to new and renewed infections,” he said.
Kroger (KR) said it has decided to return to regular store hours in parts of the South and Midwest in part because it added more workers to spell tired employees.
“Since the start of the pandemic, we’ve expanded our supply chain, enhanced cleaning procedures in our stores and hired more than 100,000 new workers,” a Kroger spokesperson said. “These steps have allowed us to expand store hours in select areas to safely meet the evolving needs of our customers as the country moves toward reopening.”
Galanti, the chief financial officer at Costco, said the company could safely handle reducing restrictions on member limits, “helped in part by adding the evening hours back.”
And Target said it was taking measures to ensure safe returns of items.
“We made the decision to begin accepting returns again given the dozens of safety measures that are now in place,” said a Target representative. “We set merchandise aside for 3 days before it would go back on the floor for resale.”
Still, labor advocates say that recent easing of policies could put employees in jeopardy.
“The threat of this virus is real across every grocery store in America,” said Marc Perrone, president of the United Food and Commercial Workers union. The union says at least 68 of its grocery workers have died from the coronavirus.