Apprehensively but out of necessity, I had to venture to one of our local supermarkets about 10 days ago, in order to stock up on essentials prior to what was predicted to be the coming peak of the COVID-19 pandemic here in the state of Massachusetts. I headed out early, equipped with mask and gloves, in order to quickly run through our household shopping list during the store hours that are designated for those over the age of 60 or otherwise considered high risk for the virus. The fact that the store has designated these exclusive hours represents an example of adaptation to these changing times.
Within the store, my shopping habits needed to adapt as well. Once I grew accustomed to my eyeglasses fogging due to my face mask, I also had to learn to navigate the departments and aisles by following the new red one-way traffic arrows and, of course, maintaining a safe distance between myself and fellow shoppers. There were measures in place to reduce the interaction between employees and customers, such as the deli products being strictly pre-sliced and pre-packaged, as well as the large plastic shields separating customers and checkout clerks. It was not time to casually compare and select fresh produce items, and there were of course many items that either had a very limited selection or were totally unavailable.
If the usual background music was playing, designed to encourage shoppers to relax and linger, I did not notice it. I only noticed announcements about how there should be only one shopper per household, how there would be purchase limits of certain items (including toilet tissue, of course!), how you needed to maintain a six foot distance from other shoppers, and why reusable shopping bags were no longer permitted at this time. At the checkout, my gloved hand held out my loyalty card for the bar code to be scanned, rather than handing it to the clerk, and there was a new set of rules and policies posted on signs affixed to the large plastic shield. One of those new policies was that, during the course of the pandemic, all sales would be final, with no returns, exchanges or refunds. That policy makes total sense under the circumstances.
How Does This Affect Your Business?
Over the years, cancellation and refund policies were established and became the usual practice in the airline, travel, hotel, and outdoor hospitality industries. These policies protected those businesses that were reserving space that could otherwise be booked by other consumers, helping to discourage double-booking and last-minute cancellations. Although there were occasional grumblings and complaints, generally from people who would otherwise abuse the spirit and intent of those policies, most of us recognized and accepted the need for these practices to be in place. These practices were essentially part of a fundamental two-way contract. The customer was being guaranteed a room in a hotel, a seat on an airliner, or a campsite or cabin at a campground, in exchange for a guarantee of payment and a timely arrival at the reserved date and time.
During this same time, supermarkets and most retailers generally established extremely flexible return, exchange, and refund policies. Intended to keep customers happy, the primary rule at the courtesy desk was to ask no questions. The only exceptions were generally for custom-made merchandise, such as a gallon of a blended paint color at a hardware store, or merchandise where returns were prohibited by law, such as undergarments that had been worn. There were many instances when customers abused those policies, exemplified in a short play that I enjoyed not that long ago, involving a main character who predictably each January returned his recently purchased artificial Christmas tree to a department store, seeking a refund. In recent years, the desire to keep customers happy has been compounded by the desire to avoid the reputational damage that can be incurred as the result of online consumer complaints.
The COVID-19 Pandemic Is a Game-Changer
During the current pandemic, it is necessary for all businesses to reassess their policies and to accept the fact that everybody is in the same big boat where we are all hurting. If you own a campground, you know that people would like nothing better than a return to what was normal just a few short weeks ago. Your customers are not cancelling their reservations because they decided to camp elsewhere or because there is rain in the forecast for the upcoming weekend. They are cancelling their reservations either because your state has temporarily shut down your business or out of a legitimate fear that social gatherings could currently lead to either infection or death. In addition, many have lost the security of employment.
With 15 million Americans filing for unemployment claims over the past three weeks, most of us are finding it necessary to limit our expenditures to necessities for the time being. The family who paid a $300.00 deposit to reserve a campsite for July now needs to be concerned about putting food on the table and paying their rent or mortgage.
When this pandemic has passed its peak, but not until we have a proven vaccine, there is going to be an understandably cautious return to the normalcy that we once enjoyed and took for granted. Your business will return, but it is unlikely that it will return as quickly as the opening of the floodgates at a dam. When business eventually returns to normal, the businesses that will prosper will be the ones who treated their customers with respect and understanding, not the ones who pointed to their rules and refused to relax their refund and cancellation policies during this pandemic.
If you would like to offer your guests an option, you could give them the choice between a full refund or an unexpiring credit with a value of 110% of what they paid. For those guests who can afford to forego the refund, consider their deposit as a voluntary loan that will help you to weather the storm. Have confidence that you and those guests will be there when the dust settles.
Remember, we are all facing this crisis together and need to pull together as a nation. We are all hurting.
At the time of this writing, as limited and inadequate as they may be, your small business may qualify for both a COVID-19 Economic Injury Disaster Loan (EIDL) and a Paycheck Protection Program (PPP) loan, both designated to be at least partially converted into non-taxable grants. Meanwhile, your customer is hoping to qualify for an Economic Impact Payment of only $1,200.00 per adult taxpayer and $500.00 per dependent child, with the expectation that those might not even materialize until September. It is not easy, and it may be painful, but I suggest you to do the right thing regardless of what your cancellation policy has outlined prior to this crisis.
This post was written by Peter Pelland