Auckland’s second lockdown this year had a significant impact on the retail sector, a new industry report outlines.
A special edition of the Retail Radar report, which measures sentiment and performance in the sector, found that more than 50 per cent of the country’s retailers reported a drop in sales over the last month. This figure was 70 per cent for retailers based in Auckland.
The alert level 3 lockdowns in February and March have also had a significant effect on retailer confidence – with almost 40 per cent of retailers now saying they are not sure – or not confident – about their survival over the next 12 months.
The pessimistic outlook is a 15 per cent jump on findings last recorded in September.
Retail NZ chief executive Greg Harford said despite the two most recent lockdowns in Auckland being shorter than those in 2020, the impact on retail was significant.
He said with each lockdown the country faced, the harder it was becoming for trade and performance to bounce back.
“It’s been a bit of a rollercoaster ride for the retail sector over the last 12 months, the sector hit the depths of depression back in April and May last year, lifted out of that a little bit, but we’ve definitely seen dips in confidence whenever there is a lockdown. The more lockdowns go on, and the more lockdowns there are, the harder it is for retailers to recover,” Harford told the Herald this morning.
“We did expect to see a dip in confidence on the back of the lockdown in Auckland, but it was more severe than we had perhaps anticipated.
“The feedback that I’ve been getting from members has been pretty gloomy through the last few weeks. Everyone wants to get the health side of things sorted and no one wants Covid to be running out of control in the community, but locking down stores is a significantly extreme measure that comes at a massive cost for businesses.”
While the sector has made a vast improvement on where it was during the height of the pandemic in this country in April and May last year, the toll of more lockdowns was weighing on many businesses, he said.
“If you think back to 12 months ago, the lockdown was a massive shock, everyone was shut down and locked down, that took a toll, a lot of business owners were using their own resources to prop up their businesses at that point, a lot of people took on extra debt and they did that again in August with the further lockdown in Auckland and then again in February, and each time that happened it becomes a little bit harder to recover.”
Harford said the performance of the sector over the remainder of the year would be dependent on any further lockdowns. Closed borders and international travel off the cards for Kiwis had been positive for retail spending, he said.
“My sense is the next 12 months are going to be mixed, on average there will probably be some positives in there for the sector, but for some individual businesses it is going to be very tough, particularly if we do see further lockdowns.”
Retailers are becoming increasingly concerned by the prospect of new Covid-19 community outbreaks in Auckland, which have knock-on effects for other parts of the country.
“The most recent change in Alert Levels (commencing 28 February) is expected to result in a drop in sales for 77 per cent of retailers across New Zealand, and 92 per cent of retailers in Auckland,” the report outlined.
“Although retailers are highly adaptable, and most have shifted to new contactless methods of doing business, shopping clearly declines significantly at Alert Levels 2 and 3.”
Retail spending through February was up 9.2 per cent compared to the same month a year earlier, but Retail NZ expects March figures to tell a different story. The retail membership organisation said the strong average sales in February masked the reality that many businesses were “seriously hurting”.
Total spending since March 2020 is up an average of 6.7 per cent, according to the report.
Harford said the sector experienced a big drop in spending in the first week of March during lockdown, and he expected to see a bounceback inline with previous trends.
Retail NZ is encouraging Government to look at how the lockdowns affect the sector, he said.
Continued pressures on the supply chain also weighed on confidence. Stock continues to be delayed due to reduced freight capacity into New Zealand, which is hitting firms in the pocket, the report outlined.
Satisfaction with government falling
Retailers are feeling less satisfied with the government’s handling of the Covid-19 pandemic in recent months, according to the report.
Forty nine per cent of retailers reported feeling unsatisfied or very unsatisfied with its response, an increase from 39 per cent recorded in August.
However, the report said it was unclear whether the growing frustration with Covid and impacts could be attributed to specific actions taken or not taken by government.
Some retailers said they would have like to have seen a more localised, suburb specific lockdown strategy, this year rather than a Auckland-wide shutdown, and there was a consensus that the rest of the country outside of Auckland should not have moved up alert levels.
Others said they would have preferred to have seen the initial three-day lockdown extended, which may have prevented or limited the second round of lockdowns a week later.
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