The country's largest retailers have pinned a retail recovery on getting Australians back into jobs and keeping unemployment low, with some warning the sector may otherwise face extended weak consumer spending and downbeat shopper confidence.
While chief executives are split on whether customers will be willing to spend in the coming months, all agreed getting people back to work was essential but said full "normality" would unlikely be achieved until a vaccine is discovered.
Retailers are keeping a close eye on unemployment figures as the initial spike in spending that occurred amid the coronavirus wanes.Credit: Paul Rovere
"We've come from an age of opulence to an age of frugality and austerity," Don Meij, chief executive of $5 billion fast-food giant Domino's, told The Age and The Sydney Morning Herald.
The self-described optimist said it is likely consumers will be cautious and less disposed to spending for another six to 12 months as a vaccine is developed, an outlook which may significantly stymie Australia's post-coronavirus economic recovery.
"People are going to be cautious because still there's still uncertainty," he said. "You lean forward when you're certain and you lean back when you're uncertain, it's just instinctual."
"So until there's immunity in society, how can society be normal?"
Consumer spending started out strong as the virus worsened across Australia, with Wednesday's figures from the Australian Bureau of Statistics revealing a record 8.5 per cent jump in retail trade through March, fuelled largely by panic buying at supermarkets and bottle shops.
Retailers also reported a huge surge in online spending, which tripled for some merchants as housebound customers took their retail therapy online.
But recent data from banks and independent analytics firms suggest shoppers have largely closed their wallets as the effect of the government's JobSeeker stimulus measures has worn off.
Commonwealth Bank reported sharp drops in spending across the board in early April, and exclusive data from analytics firm AlphaBeta and credit bureau illion released on Monday revealed a 20 per cent drop in spending last week.
At the time, NAB economists warned negative sentiment could prevail over the long term as more "gloomy" news about the economy is revealed. On Wednesday, NAB said retail sales might rebound over the coming months but noted they would be restrained by "massive job losses".
Paul Zahra, former David Jones boss and newly appointed head of the Australian Retailers Association, said spending will remain "suppressed" while unemployment remains high, saying jobs were a "key piece" in giving shoppers confidence again.
"There's a pent up emotion around getting back to shopping, and I think when that opportunity comes people will return," he said. "But they will be more cautious."
Kmart Group chief executive Ian Bailey, who oversees discount chains Kmart and Target, told The Age and The Sydney Morning Herald shoppers were prioritising "needs" and being far more selective about "wants". Parent company Wesfarmers warned investors last week that sales at Kmart and Target had declined throughout April.
"We've come from an age of opulence to an age of frugality and austerity," says Domino's chief Don Meij.Credit: Rhett Wyman
Mr Meij has also witnessed customers flocking to value-conscious purchases, with Domino's seeing increased coupon usage and more large food bundles being bought.
However, not all retailers are downbeat about the road to recovery, with JB Hi-Fi chief executive Richard Murray expressing cautious optimism that once Australians return to work and stay-at-home restrictions are eased, regular shopping habits will resume.
"People will feel good about getting back to work and getting out and about, and when you feel good, that's good for retailers," he said
"Australians have been cooped up in their houses and I think they're probably keen to get out and about, and retail's a big part of that."
Similarly, head of buy now, pay later outfit Splitit Brad Paterson said shoppers have begun to up their spending on high-end goods after a 15 per cent decline in average order value through March and April, with spending now returning to pre-coronavirus levels.
He expected a V-shaped recovery in Australia's economy, though noted this was highly correlated towards unemployment, predicting "spending will return when jobs return".
However, the former Visa executive said it's unlikely shoppers would ever return to the "old way" of shopping ever again, believing in-store social distancing restrictions would limit brick-and-mortar trade and fuel a tripling in online sales.