• June 10, 2020
Signs on shopfronts in Newmarket, Auckland, this week. Images: Brianna Stewart.
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.