It’s time to thrive: setting the scene for retail in 2021

The virus has resulted in a powerful shift in the way Australians do business. Picture: NCA NewsWire/ David Crosling

There’s a lot of adjectives to describe 2020, and most can’t be printed here.

Retailers were on the frontlines of the crisis — feeling the full brunt of the lockdowns on a business level, while ensuring Australians could shop safely and get the goods and services they need.

We learned last year just how integral the performance of the retail sector is to our national wellbeing, and in 2021 a retail recovery remains key to our economic recovery. And on that front, we have cause for some optimism.

Australians are seeing how Covid has devastated so many countries around the world and are looking at their home country with greater optimism and confidence. Retail results are tracking up over the previous year, the introduction of a vaccine will steady consumer and business confidence and retailers have used the pandemic to genuinely transform how they do business.

Despite everything that was thrown at us, many retailers had a strong finish to 2020 during the all-important Christmas trading period. Household goods performed particularly well, with many Australians ‘‘nesting’’ and purchasing things for their homes given we’re spending so much time there! Discretionary spending is a key indicator for our economic health, and it’s encouraging to see a lift in purchases of clothing, footwear and personal accessories in recent months, given this was a category that suffered during the worst of the Covid lockdowns with people not going to the office or to the social events they normally would.

The Covid vaccine is critical to consumer and business confidence this year, as is a more nationalised approach to Covid safety responses.

While it’s pleasing to hear of a rollout starting in the next month or so, the reality is it won’t be a quick fix to all our problems. Until the vaccine is distributed far and wide, we’re going to continue to see this ‘‘stop-start’’ economy, where state governments impose lockdowns and border restrictions with little notice as new cases emerge. There has been little consistency from state and territory governments when it comes to borders and lockdowns. The uncertainty and confusion around the ‘‘trigger points’’ has been a confidence killer and one of the key lessons out of this pandemic is to have a nationally consistent approach, with clear criteria so business can at least operate with some sort of certainty. Certainty drives confidence and confidence drives retail spending.

When the vaccine rollout occurs, retail workers should be prioritised as essential services workers. It’s retail workers who’ve remained at the coalface of the Australian workforce, often as people’s only interactions outside the home during lockdowns and restrictions. These courageous workers have often performed their roles at some personal risk and under the most challenging of circumstances. The government has committed to the vaccine being voluntary and it’s important we have health guidelines in place around any other requirements sooner rather than later.

Stimulus needed

The timing of the vaccine will closely coincide with the end of JobKeeper and JobSeeker — which is looming as a potential fiscal cliff. The two schemes have played a key role in stimulating the national economy, and along with the early access to superannuation, tens of billions of dollars have been injected into the retail economy. This economic stimulus can be attributed to the elevated levels of retail spending during the pre- and post-Christmas shopping period, but we have concerns for sales and consumer confidence when it’s taken away. We know that schemes like this need to have an end date, but there are still small pockets around the country where retailers are struggling and our members are supportive of more targeted assistance for businesses on an as-needs basis.

New normal

Even when there’s a vaccine in place we are likely to continue to live with the virus for some time, albeit at a reduced level, but some of the existing challenges will remain and that will have a financial impact on retailers.

The virus has resulted in a powerful shift in the way Australians do business. More people are choosing to work from home, and most employers have embraced this more hybrid approach to office life. It means that in the short to medium term, we’re not going to see pre-Covid-level office populations in our CBDs and retailers need to prepare for that. International and domestic tourists are still missing from our capital cities, and that could remain the case for quite a few more months.

What this does present is a great opportunity to redesign the retail model — in particular the CBD retail model. And leasing relationships need to be looked at as part of this. While CBD worker populations are traditionally the largest group of occupants, it’s a connected ecosystem with hospitality, cultural and residential life all feeding the retail sector. We all need to work together to revitalise the CBD and create a dynamic visitor opportunity. CBDs are powerful precincts with a magnetic pull when all these stakeholders work together to attract people into the centre.

Retail is key to Australia’s economic recovery and we cannot have an economic recovery without a retail recovery. We have survived the worst of the Covid pandemic; now it’s time to thrive.

Paul Zahra is the chief executive officer of the Australian Retailers Association.