Lockdown could cost Auckland CBD $3.1 billion by 2021

Image of Auckland city skyline
Photo by Dan Freeman on Unsplash

The economic impact of the country’s response to the coronavirus health crisis has been calculated at a whopping $3.1 billion for Auckland’s city centre alone, according to a new report from independent economist Strateg.Ease.

The report, which was commissioned by Auckland business association Heart of the City, shows that even under a quick exit from Level 3, the country’s most populous city stands to lose more than 12,400 jobs and $3.1 billion of GDP by March 2021.

Retail and hospitality businesses will be among the worst affected, along with tourism, entertainment, arts and culture, according to Viv Beck, chief executive of Heart of the City.

“The impact of losing international tourists, students and events took an early toll on these businesses and this was compounded by people working from home,” she said.

“The large-scale loss of customers will continue to have a severe impact, even once we get to alert Level 2.”

Beck pointed out that while many city-based businesses in the financial and insurance sector are able to operate remotely at almost full capacity, shops, bars and cafes are reliant on customers walking past their door.

“For those businesses, there is little appreciable difference between Levels 3 and 4. And for many, Level 2 will have ongoing restrictions that impact their viability due to physical distancing and a lot less customers,” she said.

According to the Straeg.Ease report, it will take at least two years for the city’s economy to get back to pre-pandemic levels, which is too long for many small businesses to wait.

However, they could benefit from an uptick in consumer support for local brands and businesses. New research shows Kiwis are placing more emphasis on these factors than they did before COVID-19, especially in the hospitality sector.

In a recent survey from Rutherford Labs, respondents said that being a local business is the second most important attribute for them when selecting a restaurant or cafe, after quality. Before the COVID-19 crisis, it was the fifth most important factor, after quality, price, location and customer service.

Being a local business is the third or fourth most important factor for them when selecting a clothing or supermarket brand or shopping online, which is roughly on par with their decision-making before the pandemic. Being New Zealand-made is generally considered just before or just after being a local business.

“It gives heart to local businesses, knowing Kiwis want to show their love and support,” said Ryan Jennings, head of Buy NZ Made.

He added that local businesses should market themselves clearly as “local” to speed their recovery following the lockdown.

Southland, Whangārei and Porirua are just some of the regions and cities throughout the country that have launched campaigns to encourage residents to support local businesses.

Amanda Linsley, CEO of the Manawatū Chamber of Commerce, which recently launched the “Choose Manawatū” initiative, explained how these campaigns can help.

“We want to get our locals thinking about the impact they can have when they choose to spend their money locally, supporting a ‘mum and dad’ business and keeping your dollars in the community can help retain businesses, grow our region and create a domino effect of local-to-local spend and support,” she said.


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