Covid 19 coronavirus: Retail, hospitality sectors brace for lockdown impact

Auckland’s return to level 3 lockdown is a blow for businesses that have in recent months settled into a new normal.

Business leaders say the financial and operational impact will be “huge” even if restrictions last 72 hours.

Small firms, particularly those in the retail and hospitality sectors, are expected to feel the impacts of the sudden lockdown.

Yesterday, Prime Minister Jacinda Arden announced the Auckland region would move into alert level 3, while the rest of the country would move into level 2. This means all non-essential shops are now closed to regular operations, and restaurants, cafes and other hospitality venues are required to operate contactless takeaway operations.

Supermarkets, dairies and petrol stations will remain open.

Greg Harford, chief executive of Retail NZ, said the sudden change in alert levels demonstrated just how unpredictable the coronavirus was. Just as the country assumed it was out of the woods and on a trajectory of recovery, restrictions were reintroduced.

“It’s really disappointing being back here, and retailers will be devastated by the impacts this will have,” Harford told the Herald.

Even if Auckland’s lockdown lasted just three days, the financial impact would be “huge”, he said. “Last time Auckland went to level 3 there was a massive chilling effect on retail consumption, not just in Auckland but right through the country and we would expect the same be happening this week.

“[The economy and spending] has bounced back very strongly across most of the retail sector over the last few months so it is disappointing that we are now in a situation where we’re in a level 3 lockdown.”

Jacob Faull, founder of retailer Nature Baby, which operates two shops in Auckland and one in Wellington, said he believed the move to alert level 3 in Auckland and level 2 elsewhere was the “right decision” by the Government.

While he was happy for “a short remedy” to stop the spread, Faull said he was concerned by the prospect of an extended period of lockdown.

“We can manage three days but if there is an extension, it does have a bigger financial impact.

“From the first lockdown, our business was over 30 per cent down, and the second lockdown it was down over 40 per cent so it will be tough if it goes on longer.”

Nature Baby’s two Auckland stores will be closed to in-store browsing, although they will offer click-and-collect and contactless shopping services. Its Wellington store will enforce social distancing in-store.

Faull said revenue in the Wellington store experienced a drop in trade when Auckland was moved into alert level 3 lockdown in the past. But, because the business had been through periods of restricted trade before it was able to redeploy practices that had been used last time.

Industry commentator Chris Wilkinson said the lockdown would be very challenging for all businesses as it “compromises cashflow and disrupts what has been a steady rebuild of reliable shopper patterns and goodwill”.

Wilkinson said the move to alert levels 2 and 3 would be felt both economically and socially, and well after the three days if restrictions are lifted later this week.

“In the city centre, where many businesses were working toward having workers back into the office – at least some of the time, this resets momentum which will have a dramatic impact on CBD audiences. That will be gut-wrenching for businesses of all sizes who count on these prime summer months when numbers and spending are traditionally at their best.

“Auckland’s CBD has been benefiting from business and leisure travellers returning – along with some domestic boost from the America’s Cup. The lockdown will change people’s travel plans and the activity of those already there – severely impacting earning potential of retail, hospitality and service businesses.”

Wilkinson agrees that the impact of restrictions would be felt beyond Auckland as many firms relied on customers and products from the area.

“Affects on Aucklanders’ limitations on travel, consumer demand and supply chain will have a tidal effect throughout New Zealand.”

Harford said businesses would need financial support from the Government, even for just the three days of restricted trade.

“The challenge is, while retail performance on average has been pretty strong, there are a number of businesses that just aren’t in a position to take a further [financial] hit – those businesses will be in dire need of government support by mid-week.

“There’s going to be huge impacts, even if this is just three days. The impacts will be very significant on revenues for businesses that are in Auckland and businesses through the rest of the country as well.”

The Government says it will put in place financial support for businesses if the level 3 lockdown goes on longer than three days.

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