The move to Covid-19 Alert Level 1 meant a desperately-needed end to the restrictions that stopped thousands of shops from trading as normal.
Unfortunately, the normal they reopened to is not the normal they would have enjoyed had the restrictions not robbed them of the last months of autumn, their last chance to attract significant revenue before the wind, rain and cold of winter conspires to keep would-be customers at home.
Nonetheless, businesses unshackled from the proscriptive rules of the pandemic response will hope the economists are right to say
there will be a ‘‘bump’’ in sales as the impulse to spend, pent-up over lockdown, is unleashed in a flurry of catchup shopping. Note this is not being called a rebound; it is being called a bump because pundits expect a a drop on the other side.
The Dunedin City Council, eyeing a downtown redevelopment project now challenged by the pandemic, has already been advised by commercial strategist First Retail Group that job losses, new work practices, reduced and lost wages, and a hit to consumer confidence will knock retail growth.
In its report on the proposed George St redevelopment, it noted the shift to online spending had already proved challenging. Lockdown may have made the move even more marked.
This is not news to southern retailers and many have insulated themselves from the worst effects of a drop in footfall by also offering their goods and services online. Increasingly, they are providing a niche service alongside their online offering: a visit to their store is now ‘‘destination shopping’’ underpinned by personalised service.
This shift is happening everywhere but it has gathered speed in the wake of the Covid-19 pandemic. Bricks-and-mortar stores are no longer entirely necessary for market presence.
The Warehouse Group is one of the largest retailing groups in New Zealand. It has $3 billion in sales a year and a clutch of stores in the major centres across Otago and Southland. It has two stores in Dunedin but the downtown store may be one of six across the country to close as the company considers the ‘‘appropriateness’’ of its network.
The company says it is about ‘‘making sure the business carries forward’’ but that the changes would have been proposed regardless of the impact of Covid-19. Online markets and international competition sharpened its response. The Government’s wage subsidy might have softened the pandemic’s blow to the tune of $51.98 million, but it could not calm headwinds already battering some stores.
Bunnings Ltd, carrying a suite of under-performing locations, noted some of the same issues when it announced the closure of seven stores. Smith City (Southern) Ltd, burdened by debt and an unsustainable capital structure, noted the impact of the pandemic as it announced its sale and restructuring.
That the pandemic underscored post-lockdown trends is clear in H&J Smith Holdings Ltd’s decision to close shops in Te Anau and Balclutha, and downsize its department store in Gore, to
consolidate in Invercargill and secure the long-term future of its retail division.
H&J Smith managing director Jason Smith said the company was ‘‘significantly affected’’ by the Covid-19 pandemic but that increasing
wage and compliance costs, security of supply and competition from multinational chains were issues before Level 4. They will be issues for countless others.
Many such retailers are also running down their reserves — if they have any — to meet their fixed costs, and to account for the income they lost during the restrictions. They will cut costs, trim their overheads and defer investment until they can be sure they are ready for the future.
We should recognise this as life returns to near normal. Open doors, and open trade, does not mean the crisis is over.
