Change or close shop the options for bricks and mortar retailers

Retailers will have to close up shop or take the opportunity to change their operating model due to the lingering lockdown effects, says a New Zealand retail expert.

Former NZ Retail magazine editor Sarah Dunn says businesses cannot return to a pre-pandemic normal and big changes are needed.

“It’s not a case of bouncing back,” says Ms Dunn.

“Many retailers were not in a good position going into COVID.”

The wage subsidy gave businesses some breathing room to rethink their model, says Ms Dunn, who is a business-to-business content marketing specialist.

Applications for the wage subsidy extension opened this morning, but businesses will need to prove they have experienced a minimum 40% decline in revenue compared to last year.

“Most retailers will easily clear that hurdle,” says Ms Dunn.

Retail sales were down nationally almost 80% in April compared to the same time last year, according to Retail NZ’s June report.

Ms Dunn says she has witnessed the closure of a lot of brick and mortar stores, with many businesses adapting to online-only operations.

Ms Dunn says most retailers operate on tight margins averaging 3.7%, combined with rising commercial rent prices and international trade fluctuations.

Businesses need to move forward quite substantially each week to continue trading and lockdown meant a huge step backwards, says Ms Dunn.

“Pre-COVID, businesses were left with not a lot of room to move,” says Ms Dunn. “They will have real trouble coming out [of the pandemic].”

More than 60% of retailers in the report say they are not confident they will survive the tail end of the pandemic, with 5% expected to cease trading altogether.