Between now and at least the end of March if not longer, a growing number of retailers, malls, and shopping centers are shutting their doors to reduce the spread of COVID-19, or as Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, says to “flatten the curve.”
Thereafter, following the experience of China where the pandemic originated, retailers are likely to reopen slowly depending upon local conditions and operate under reduced hours.
Already three of the nation’s largest malls – Mall of America in Minneapolis, American Dream Mall in New Jersey, and King of Prussia outside of Philadelphia – have turned out the lights.
Further, New Jersey and Pennsylvania have ordered all malls shut and 46 other states have announced various retail closing orders, or said they plan to issue such orders soon, according to the International Council of Shopping Centers.
The resulting hit to retailers, not to mention the economy, which is repeatedly called “unprecedented” is shaping up to be potentially catastrophic.
Coresight Research’s CEO Deborah Weinswig predicts that more than 15,000 stores could close in 2020, approaching double the rate from last year when store closures reached historic highs of 9,300. Retail investment advisor Jan Rogers Kniffen, CEO of J. Rogers Kniffen World Wide Enterprises, said between 30 to 40 retailers could declare bankruptcy as a result.
Already the economic ramifications of the coronavirus are being felt on Wall Street, as well as financial centers throughout the world. But more than the loss of money, the human toll is tragic with nearly 17,000 deaths worldwide tallied by Johns Hopkins University as of this writing, and those numbers will continue to grow in the days, weeks, and months ahead.
Not only does this threaten the lives of Americans, it also threatens their livelihoods, with the retail industry being one of the nation’s largest employment sectors. The National Retail Federation reports that retail supports 42 million American jobs, a vast number of them low-income hourly workers who can ill afford two weeks without pay.
A poll conducted March 13-14 by NPR/PBS NewsHour/Marist found that nearly one in five American households have experienced a layoff or a reduction in work hours, with lower-income households the most profoundly affected.
With everyone on edge and anxiety growing by the minute, Whole Foods CEO John Mackey stepped into the fray with the suggestion that its employees donate paid time off to fellow coworkers sickened by the virus.
In a memo to employees intended to reassure them that as Whole Foods staffers, as all Amazon employees, they will have access to two-weeks paid time off related to coronavirus, it had quite the opposite effect.
Incensed staff members took to social media with outrage that they were expected “to figure it out within themselves,” resulting in a Change.org petition that Amazon and all of its companies give its employees more paid time off during the coronavirus crisis.
“Given that Whole Foods is owned by Amazon, one of the most valuable corporations in the world, owned by Jeff Bezos, the wealthiest person on earth, it is incomprehensible that better conditions are not granted to Whole Foods’ employees. We implore Jeff Bezos to provide his employees or ‘associates’ with better working conditions and paid medical leave during this national health crisis and beyond,” the petition reads. So far, over a quarter-million people have signed on.
The company got the message and announced it would provide an additional $2 per hour to the paychecks of all U.S. Amazon and Whole Foods employees through the end of April.
Further, Amazon contributed an additional $1.6 million to its Team Member Emergency Fund to support its employees facing unforeseen financial hardships.
But is that enough, especially after what I just heard from a Whole Foods team member. She said her doctor ordered her to self-quarantine for two weeks, but the company refused to accept her doctor’s note to receive paid time off. This may be an isolated incident related to local management, or it may signal an on-going issue of less-than-supportive management at Whole Foods corporate.
At its core, retail is a people, not a product business. A retail organization is structured by the people in the company to serve the needs of those people called customers. It is a complex feedback system based on trust. When trust in any of the links in that system is broken, the entire system is threatened.
Whole Foods is at such a crossroads of broken trust, which every other retailer wants to avoid, so I turned to an expert in the people-part of the retail organizational system, Paul Warner Ph.D, vice president of customer and employee experience strategy at InMoment. Warner holds not one, but two doctorate degrees in clinical psychology and industrial-organizational psychology.
“People are hypervigilant right now,” Warner explains. “Emotions are ruling the roost, so any messages are likely to generate a strong emotional response. It is hard to find rational actors at this time.”
Emotional empathy is missing when it is needed most
Corporate CEOs, like Bezos and Mackey, are well versed in dealing with anxiety among investors on Wall Street. But their anxiety is largely about losing money. Retail employees’ anxiety now goes much deeper than that.
Yes, they want to know the company has their back financially but also that the company leadership understands them as people too. That requires emotional empathy, which Warner often finds lacking in the C-suite.
“I’ve seen a lot of these kind of these internal memos [referring to Mackey’s] that spell out policies and procedures, then add with some weak ‘we appreciate you and understand how hard this is’ kind of message thrown in at the end. That message just gets lost because the feeling is missing,” he says.
Instead, all communications must start with empathy and go on to wrap the policy and procedure messages with empathy too. The consequences of not communicating emotional empathy to employees and customers at a time of crisis can be huge during and after it abates.
Employees can be a retailers’ chief brand ambassadors or detractors
One consequence for the company is clear in the Whole Foods example. The message leaked to the outside world, which it inevitably will in this social media age, thus exposing customers and potential customers to what is going on behind the curtain.
It is hard to imagine that in this day of influencer marketing and highly-paid brand ambassadors, companies overlook the fact that its employees are their most valuable brand advocates or potentially damaging detractors.
We all are familiar with the statistics about the negative effects from a bad customer experience. An unhappy customer will typically tell nine to 15 other people about their bad experience.
Warner says his research finds the potential reach of an employees’ bad company experience is magnified even more. They will talk to co-workers, family, and friends, negatively impacting the company’s reputation far and wide because within their networks, they are recognized as a trusted authority regarding the company.
“If an employee feels negative about their organization, they’re going to talk two-times more than people that love the organization,” he warns. “There is level of contagion of such negative messages. If employees are vocal about their dislike of the organization, it can be devastating.”
Highly-engaged employees will be most needed afterwards
And that contagion of negative sentiments can wreak havoc on the company when the crisis is over and people return to work, at the very time when everyone’s best effort will be most needed.
“When this is all over, it is going to be very challenging for employees to forget what they just went through. Companies, like Whole Foods, may find a higher proportion of what I label ‘fully disengaged people,’ rather than engaged people which they will need,” he explains.
“People want to feel cared for. There is a psychological contract that a person gives their best self to the company and they expect the company to give the same back. When that contract is broken, it creates brand detractors, not advocates,” Warner warns.
In the current environment, though Warner would argue in any environment, retailers must be sensitive to the emotions of their most valuable resource, their human capital, who in turn help generate the financial capital needed for the business to operate.
To recover from this coronavirus crisis, retailers are going to need fully-engaged employees. Whole Foods made a mistake. Mackey and his leadership team need to lean into empathy for their employees who they will need for the company’s recovery. There is a valuable lesson here for every other retailer.
“Organizations are social systems,” he explains. “One individual, one event or one factor can ripple throughout the whole system. To mitigate the stress, anxiety and fear, employees need to see an overt expression of empathy. The actions must be congruent with the messages. The right actions without the appropriate empathetic message won’t get through.”
As Maya Angelo reminds us, “People will forget what you said, people will forget what you did, but people will never forget how you made them feel.”
That is a message all retailers should take to heart right now and carry on into the future. The damage may already have been done by Whole Foods.