The following report is a synthesis of news and trends seen in the last quarter. This update is focused solely on themes of operational significance. The following take-a-ways are meant to foster ideas and promote creative thinking as each organization will interpret and distill this information in its own unique manner.

TOPIC 1 : SHORTAGES: LABOR & SUPPLY CHAIN

Can’t find help? Employees seem to be in the driver’s seat at the moment. Be it for retailers, warehouses, construction, restaurants, or office workers, there definitely appears to be an imbalance in the employer-employee system. COVID concerns, unemployment benefits, open school systems/childcare, or a desire for change; something is causing this issue to persist.

Besides increasing wages, what else can employers do to entice and maintain their much-needed workforce? One theme that continues to emerge is flexibility. Allowing employees the ability to customize work schedules and enable a more fluid balance between traditional work settings and work-from-home. Not only have employers learned lessons & new behaviors as a result of the pandemic but so too have employees.

On the supply chain side of things, it’s still problematic. Backlogs of demand continue to interrupt the return to normal commerce.

In all, the mounting issues in finding labor are accelerating supply-chain troubles while inflating prices, hindering growth, and eroding profit margins. While labor shortages have been concentrated in lower-paying industries thus far, data points suggest the problem might be spreading.

Ongoing Issues to Consider:

• Find Other Ways to Make a Return-to-Work Attractive
• If Hiring Remains Difficult, How Important Becomes Retention?
• How Price Elastic is any Given Industry or Product?

TOPIC 2: SEPTEMBER = BACK TO SCHOOL / BACK TO WORK?

Companies and universities are already beginning to mandate proof of vaccination before returning to work and campuses. Momentum is mounting for a true return to normal in September. Besides vaccinations, the other major component to a successful return is the in-person reopening of the school systems. Will they be open (full-time), what about children under 12 who haven’t been able to get vaccinated, the Delta variant, masks, HVAC filtration?

General consensus is building around September 7th as being the “date” we all resume normal activities. That said, employees have grown accustomed to a new manner of working (flexibility), some organizations prefer the benefits associated with work-from-home or a hybrid work environment; so, what will the Fall really look like?

Some organizations have put other mandates in place; show up or else! The thought being, we have the space, and we want everyone to get back to business. It is anticipated that approximately 2/3 of all workers will be back in September to some type of in-person working schedule. That said, employees still seem hesitant; getting back on trains, subways, density, cleanliness, and safety issues still persist.

Whatever the actual results of September 7th may be, it’s looking more and more likely that returning to the normal work environment and routine will happen. The question still remains how quickly will employees embrace the change after 18 months of something uniquely different?

TOPIC 3: HOW RETAILERS ARE COPING WITH CHANGE

Change continues at a rapid pace. The necessity to maintain a significant retail storefront presence has begun to morph. The mix of consumer preferences for not only online buying but also brand interaction is at a crossroads. Retailers have been re-examining their current footprints and
long-term needs. This has continued to cause question marks as to where things are headed.

Not only does a reduction in retail footprint reduce costs but so too does the added expense reduction in inventory. Changing the supply /demand dynamic through distribution channels is yet another layer of complexities.

Another question on the minds of retailers; Will the “Office” customer come back; and, if so, when?

Bottom line, retailers (like other industries) need to create agile and adaptive operating structures with which to navigate successfully to the next plateau of stability and predictability. Be it supply chain, omnichannel commerce, technology integration, lease terms structuring, portfolio size, brand experience, etc., change is constant at the moment.

TOPIC 4: CITY OR SUBURB?

Ongoing Issues to Consider:

• What do employees want?
• Safety Concerns May Persist
• Density in Certain Areas
• Salary Differentials (What’s justifiable?)
• Access to Labor & Talent

TOPIC 5: THE “NEW” LEASE TERM

What option do you have if you can’t decide what to do right now; Punt!

Organizations who currently lack visibility in the consistency of their business environment want the time to see how the pandemic resolves itself and, more importantly, how employees in turn respond. As a result, they are taking the time to think. Shorter-term leases or delaying long-term initiatives have become a common coping mechanism for this recent pain point. Why continue with traditional pre-pandemic actions and initiatives when the world has and might continue to change.

Questions remain on C-Suite’s minds: Do we want to stay here?, Should we go hybrid/hoteling?, Do we need this much space? Has our operating
model changed (permanently)?

As many organizations today have no definitive answers to these types of questions, many have reverted to the new band-aid short-term lease term. One-to-three years buys needed time to readjust, recalibrate and determine long-term solutions.