A quarter of NZ retailers ‘on knife edge’ after latest lockdown ‘hammering’

Downtown Tauranga during lockdown earlier this year.

Nearly one in four New Zealand retailers are “on a knife edge” in the wake of the Covid-19 lockdowns according to research from Retail New Zealand

In the latest edition of its Retail Radar report, the organisation says retailer confidence fell “significantly” due to Auckland’s Level 3 lockdown last month 

“Thirteen per cent of retailers are saying that they are not confident their businesses will survive, and a further 23 per cent are on a knife edge, saying it could go either way,” said Retail NZ CEO Greg Harford. 

“This represents a substantial decline in retailer confidence that can be attributed directly to the impacts of the Auckland lockdown, and suggests that the survival of around 10,000 businesses could be at serious risk.”

Harford said the retailers’ confidence had improved significantly during June and July, “but it took a hammering through August”.

While Auckland retailers were able to sell online during the Level 3 lockdown, this still represents a small proportion of sales overall, and a big reduction in sales in the second half of August has been a key driver of the decline in confidence. 

“While average spending per site was up overall during August, driven by strong sales during the first part of the month, 90 per cent of retailers with stores in Auckland, and 53 per cent of stores outside Auckland reported a drop in sales during August as a result of the lockdown.”

Harford said sales from March through August were down by 6.4 per cent year on year. 

“Retailers operate on extremely tight margins. The average net margin in retail is just 3.6 per cent, which means that enforced closures have a massive impact on the sector overall. The Wage Subsidy has helped keep people employed over the last few months, but the absence of continued government support for retailers moving forward is likely to see job losses and business failures over the coming months.” 

Among other key findings in Retail Radar are that 73 per cent of businesses are reporting issues with international supply chains, with the key issues being getting products shipped to New Zealand and across the border, due to reductions in freight and port capacity. 

Police checkpoints during Auckland’s lockdown last month led to long delays for freight movement in and out of the region, with one in two retailers saying they were affected by that nationwide, but only 40 per cent of retailers with stores in Auckland impacted, likely because the city is a key freight and logistics hub. 

A smaller number report problems with being able to place orders with suppliers overseas.

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