Australian retailers will start to reopen stores this week thanks to the easing of restrictions in some states and territories, putting an earlier-than-expected end to a five-week shutdown that has decimated sales.
ASX-listed linen seller Adairs and outdoor apparel merchant Kathmandu have either already reopened a number of outlets or plan to before the end of the week, with both retailers hoping shoppers will be eager to go to stores after weeks of shopping online.
Kathmandu chief executive Reuben Casey.
Kathmandu chief executive Reuben Casey told The Age and The Sydney Morning Herald the outdoor and camping gear chain opened 60 stores over the weekend, mainly across New South Wales and Queensland, as those states relaxed their social distancing rules.
A handful of trial stores were also opened in Melbourne, Adelaide and Perth, all of which saw strong demand, Mr Casey said. This outcome has prompted Kathmandu to accelerate the reopening of its 120 stores.
"We've been encouraged by the demand we've had over the weekend, we do think customers are willing to get out and shop," he said.
"We're going state by state, depending on what the restrictions are, though we're hoping to have all stores opened by the end of this week."
Adairs CEO Mark Ronan has been encouraged by Australia's effective control of COVID-19.
Similarly, Adairs will reopen its larger format stores in Queensland from Thursday, May 7, with the rest of its 160 stores to progressively reopen after that. Chief executive Mark Ronan admitted he was surprised to be opening stores so soon, saying he expected the shutdown to last longer.
"Definitely we thought they would have been closed for longer, but the good work the government and Australians themselves have done ... meant that we've been able to reopen them much faster than we thought," he said.
Queensland stores will reopen first, as residents there have been permitted to leave home for non-essential shopping, Mr Ronan said, noting Adairs would want to see similar restrictions lifted in other states before reopening stores en masse.
Despite the positive news, Adairs shares on Monday slid 3.9 per cent to $1.47, while Kathmandu shares declined 3.4 per cent to 71¢.
Both Adairs and Kathmandu have had physical stores shuttered since late March, when an escalation in coronavirus infection rates and the implementation of strict social distancing measures prompted mass shutdowns across the retail sector.
Major retailers Myer and Premier Investments both shut stores at around the same time but were forced to lengthen their shutdowns after initially telling investors they would reopen in late April, pushing the date back to Monday, May 11.
Upon reopening, Credit Suisse analyst Grant Saligari predicted widespread discounting across retailers as they clear out weeks of built up inventory, leading to a spike in sales that he warned would be short-lived.
"Beyond that spike, discretionary spending is likely to fall as households manage significant declines in household cash income," Dr Saligari said.
Over the past five weeks, sales have declined sharply, down 37 per cent at Adairs and as much as 50 per cent to 70 per cent at other major retailers.
However, Mr Ronan said this drop would have been much worse if not for a tripling in online demand, which has skyrocketed 221 per cent at Adairs over the past month.
"It's well ahead of where we thought we would be," he said. "It's clear we've created a shift in consumer sentiment and their ways of shopping."
Online also spiked 200 per cent for Kathmandu, with Mr Casey saying being locked indoors hasn't reduced Australians' perennial love for puffer jackets.
"We saw a little bit of demand for tents at [the] very start of lockdown, and sleeping mats, which I think people were using for yoga," he said.
"But other than that, puffer jackets."