COVID-19 has reshaped the retail sector. As stores are forced to close, temporarily due to lockdown or permanently to reduce costs, many retailers have decided to move online, exclusively or partially.

Even before the pandemic, the increasing importance of a social media presence, brand transparency and a focus on sustainability was driving retailers to reinvent and develop their online presence.

Opportunities - from surviving to thriving

Now, as numerous businesses face unavoidable store closures, many are seeking to rethink their business approach and transfer jobs to the e-commerce sector. For example:

  • John Lewis: Eight stores are closing permanently, but the retailer is looking to transfer staff to a Waitrose store or to the company's online arms. The partnership estimates between 60-70% of this year's sales will be online and is looking to invest heavily into e-commerce.
  • TM Lewin: The shirts and ties retailer went into pre-pack administration in June and will be closing all 66 of its UK shops. Having proved this format is no longer viable, the 120 year old retailer will be moving to an online-only model.
  • Cath Kidston: The fashion and homeware chain called in administrators in June and is set to close all its shops. However, the owners have secured a deal to buy back the brand and its online operations.
  • National Theatre: The National Theatre has launched a new 'National Theatre at Home' streaming service, offering one-off rentals, monthly and annual subscriptions. The content is available to watch worldwide, giving the National Theatre access to an entirely new sector of consumers – a forward-thinking move to maintain and even increase its audience, with an eye to the time when theatres can open again.
  • Delivery bookings: In addition to their e-commerce offerings, more businesses are now offering delivery services. The Cambridge Wine Merchants have quickly switched to offer in-house delivery to local customers, whilst others are opting to use existing delivery platforms - Ocado, Deliveroo and Just Eat are some of the fastest growing brands in the UK.

Obligations - the COVID-19 Taskforce, refunds and returns

The Competition and Markets Authority (CMA) aims to promote competition to benefit consumers.

The CMA has made clear that it has not relaxed its rules on unfair trading practices and anti-competitive behaviour during the pandemic. In response to a vast increase in complaints (4 out of 5 of them concerning cancellations and refunds resulting from the pandemic) the CMA has created a COVID-19 taskforce to investigate and bring action against businesses:

  • refusing refunds
  • introducing unnecessary complexity into the refund process
  • charging high administration or cancellation fees
  • pressuring consumers into accepting vouchers instead of cash refunds.

In an open letter to the package holiday sector (as a precursor to taking formal action) the CMA voiced its concerns over 17,500 complaints from consumers about traders who had not given refunds within the 14 day deadline and had provided misleading information.

Other sectors of concern include wedding and private events venues, holiday accommodation, nurseries and childcare. Businesses in these sectors may face increased scrutiny from the CMA in the coming months.

In most cases retailers are required to issue a refund where:

  • the retailer has cancelled a contract without providing any of the goods or services
  • the retailer cannot provide the service due to tier or lockdown restrictions
  • the consumer cancels or is prevented from receiving the service due to restrictions.

There are exceptions to these rules; for example, where a consumer has already received some benefit or the goods/services are provided as part of a subscription, where the refund may be limited or payment suspended.

However, whilst the CMA permits credits, vouchers and re-scheduling as alternatives to a refund, consumers should not be misled or obliged to accept these alternatives. Likewise, although the CMA acknowledges refunds may be delayed in the current circumstances, timeframes should be reasonable and clearly communicated.

In response to the CMA's increased monitoring and to rebuild consumers' trust and confidence in their online offering, many businesses are quickly adapting to go beyond the strict legal requirements and offer their customers more beneficial terms. For example, many major retailers have extended their 'change of mind' returns to after stores re-open.

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