Coronavirus Australia: Will the latest restrictions kill off retail?

The PM has introduced a new round of tough coronavirus rules – but many believe it could be the death knell for this struggling industry.

The coronavirus pandemic has rendered everyday life unrecognisable as the Federal Government introduces ever-harsher measures in a desperate bid to contain the spread.

From today, even tougher measures have kicked in, with Australians forbidden from going out in public with more than one other person and warned against shopping for anything but essential items, among other restrictions.

The new rules are clearly designed to protect the public and save lives – but many also believe it could prove disastrous for Australia’s already battered retail industry.

And it is feared some individual retailers forced into a “temporary” shutdown as a result of COVID-19 may never reopen.

‘ANOTHER BODY BLOW’

AMP Capital chief economist Dr Shane Oliver told news.com.au the latest restrictions would be yet another shock for the ailing sector.

“Retailers were already struggling, and this is another body blow for them,” he said.

“We were already hearing stories of retailers folding over the last year, reflecting slower growth in the Australian economy.”

Dr Oliver said some businesses – such as coffee shops, restaurants, gyms and hotels – would be especially likely to “bounce back” once the outbreak was contained, provided they received financial support in the months ahead.

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But he warned retail would take longer to recover as it had already been struggling in the first place.

And he said isolated Australians would be increasingly shopping online, which could cause further problems in the longer term.

“This will reinforce the trend of online shopping, like the very strong Australian dollar did eight or nine years ago,” he said.

“That opened Australians up to global choice on the net, and we started buying more online and internationally.

“More and more Australians will now move to online purchases, and while some retailers that already have a good online presence to complement their physical stores will benefit, those that haven’t will struggle more.”

‘RETAIL APOCALYPSE’

Queensland University of Technology retail expert Dr Gary Mortimer told news.com.au he had been visiting shopping centres daily and had seen more and more retailers voluntarily close their doors over the past fortnight as foot traffic dried up.

He said the Prime Minister's latest restrictions on movements would put “further downward pressure” on retail spending, which had already been devastated by what some commentators had dubbed “Australia’s retail apocalypse” earlier this year.

“At the start of the year we saw a number of big brands going into voluntary administration – and that was well before the impact of coronavirus,” Dr Mortimer said.

“I suspect some brands, particularly within the clothing and footwear sectors, may not even survive the next four weeks.”

Scores of retailers – including Smiggle – have voluntarily closed and stood down staff. Picture: Asanka Ratnayake/Getty Images

Dr Mortimer said the next challenge would be how retailers responded when they were able to reopen, and many would be plagued with issues surrounding inventory clearance.

“Shops like Myer, which is now closed, would be sitting on tens of thousands of Easter products … which will be worthless after Easter,” he said.

“And another challenge for fashion retailers is that this is the traditional mid-season clearance sales period, which will not take place – that means if they’re sitting on winter coats and other inventory, they will have lost all this time to sell it.

“When they do reopen, what will happen is that many retailers will move directly to deep discounting to clear their backlog of inventory, and of course the next thing to ask is are retailers going to be in a financial position to forward buy their spring ranges of clothing?”

He said about 65 per cent of stores at the normally buzzing Westfield Chermside in Brisbane’s inner north had been closed yesterday afternoon, which showed retailers were crying out for a “clear message” from the Government to close all non-essential retail and shopping centres.

“Everything was in darkness, because what is the point of opening now? I think ultimately retailers are just looking for that announcement so they can tell their team with certainty ‘this is a government directive, not a decision from the board or management’,” Dr Mortimer said.

“Team members are trying to remain upbeat and happy with the few remaining customers coming in, but I would imagine they’re feeling quite stressed themselves with no certainty whether they will have a job or not at the end of the week.

“Stores that remain open have teams that are incredibly stressed as well as a stressed leadership and management team that don’t know whether it is a smart move to close or not.”

Dr Mortimer said the Government's multibillion-dollar stimulus package – which includes $750 payments to 6.5 million Australians that will begin landing in accounts from tomorrow – would likely not make a significant difference to the retail industry.

“The public is genuinely concerned and anxious, so I think these stimulus packages will only go towards paying debt, bills and essentials – people will be paying the rent and the mortgage, putting fuel in the car and food on the table, and at this point consumers aren’t looking to buy clothing, electronics and things like that,” he said.

He said while some retail sub-sectors such as supermarkets, electronics and stationery stores were doing well at the moment as Australians stocked up on staples and office equipment as they worked and studied from home, other areas would be increasingly “challenged”.

“Clearly some clothing, footwear and accessories brands might not survive this challenging period as well as some smaller, independent bistros, cafes and bars,” he said.

He added that many small business owners would struggle to pay their business bills as well as cover their own rent or mortgage and could end up going into receivership.

Dr Mortimer said while some retailers were on a hiring blitz of temporary, casual staff to cope with the recent spike in demand caused by the virus, this may give people “false hope” when it came to our overall unemployment rate.

“They’re there in the short term to help deal with deliveries and replenishing stock, but when everything reopens and the retail demand begins to normalise, there will be less demand for that workforce,” he said.