The retail and hospitality sectors are reeling as operators and industry associations come to grips with the potential dire impact of a second round of lockdown.

From midday today, Auckland will be moved into Alert level 3 meaning all but essential businesses must shut their doors.

Restaurants and bars must be closed until further notice and retail stores and takeaway businesses must shut their doors to the public unless they have been deemed an "essential service". Online orders and contactless pick-up of all goods is permitted under alert level 2.

Last night Prime Minister Jacinda Ardern and director general of health Dr Ashley Bloomfield announced four confirmed cases of community transmission in South Auckland.

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As a precautionary measure to stop the spread of the virus, the Government announced that Auckland would be placed into alert level 3 and the rest of New Zealand level 2 from midday today.

With Auckland being the most populous city and residents unable to travel out of the boundaries of the Supercity spanning from Wellsford through to Pukekohe, industry organisations say this is effectively a hard lockdown for the entire country.

Retail NZ says the move back into lockdown is a blow for the industry that was yet to get back on its feet after more than eight weeks under lockdown this year.

"My heart sank when I heard the news - it's disappointing for everyone in New Zealand, but especially for those businesses that have been struggling to recover from the lockdown that ran from March to May," Greg Harford, chief executive of Retail NZ, told the Herald.

"It could well be the nail in the coffin for a number of small businesses that just don't have the resources to survive another period."

Although the lockdown has been announced for three days at this stage, Harford said it was highly likely this would be extended.

"It is going to depend a lot on what health authorities find when they work through how it has spread. There's certainly a risk that this could be extended further and that would be a nightmare scenario."

Another wage subsidy would be needed to keep operators in the industry afloat if the three-day lockdown is extended, he said.

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Hospitality NZ chief executive Julie White said the move to a form of lockdown again was a "devastating" development for hospitality and the wider business community.

"If we go up to level 4, that will be the end of people's businesses," White said.

"We had this glimmer of light just recently - all the trading figures for hospitality were up and a sense of optimism that we would get through it."

It was not easy for a food and beverage operation to shut and there would be a lot of food waste as a result, White said.

"Operators will have to work furiously today to shut down their operations, they're going to have to look at fresh produce and what do they do and what can be saved.

"If we go to a full shutdown on Friday, that means bars, for example, will have to pour their kegs down the drain."

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For businesses based out of Auckland, the move to level 2 would mean more staff rostered on to enable organisations to operate with single servers and in line with the "three S's".

But White said many hospitality businesses that reopened under Alert level 2 previously had lost huge amounts of money and that it was not an efficient way to be operating.

She warned that Auckland's stricter lockdown would have dire knock-on effects for the rest of the country.

"Auckland is home to a big portion of the population and most people are travelling from Auckland, so this is going to impact the accommodation industry across New Zealand as Aucklanders won't be travelling.

"It was our greatest fear that Auckland would be locked down."

White said the move to Level 3 was a "kick in the guts" for the industry.

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"I'm expecting 10 per cent [of all hospitality businesses] will not reopen if we go into lockdown - they will literally shut their doors and that's it.

"There will be a knock-on effect throughout New Zealand. It is really the small guys in the cities that are going to not make it."

Marisa Bidois, chief executive of the Restaurant Association, said the move to alert level 3 and 2 would be "catastrophic" for hospitality.

"We're focused on making sure our member's have all of the information they need to follow the rules; for level 3; close their shop fronts, get ready for online ordering, contactless pick-up and for level 2; remembering the "three S's" with the single server, separation and seated," Bidois said, adding that the stricter rules in Auckland would have wider impacts businesses based elsewhere in the country.

"We've been here before, we know how its works, it will just be a matter of familiarising ourselves with the rules again."

Bidois said the Restaurant Association, like other industry bodies, received no prior warning about the move in alert levels before the Prime Minister's announcement on Tuesday evening.

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"I don't think our industry is prepared for a further 8-week lockdown," Bidois said.

"We had some really positive trading weeks with the recent school holidays, there were really good signs that was some improvement in our sector, however, there were still a percentage of businesses that had never really recovered from the first lockdown so I believe we may see more business closures."

Businesses face more uncertainty as the country moves back into lockdown from midday. Photo / Getty Images
Businesses face more uncertainty as the country moves back into lockdown from midday. Photo / Getty Images

Retail analyst Chris Wilkinson said emerging confidence across the retail and hospitality sectors would be erased following the upgrade in alert levels.

"There wouldn't be one person in the retail and hospitality sector that won't be incredibly disappointed in what's come.

"There was a fairly confident trajectory, we knew there was going to be uncertainty ahead, but for this to happen, it will completely throw [progress]," Wilkinson said.

The rest of the world had been looking to New Zealand as a case study of how to handle the crisis and how businesses could safely reopen after lockdown, which made the move backwards more devastating, Wilkinson said.

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"We've been seen as best practice, the way of businesses responded was seamless, we were really humbled in the fact that other countries had reached out to us to ask how they should be doing things and what to expect, and now for this to happen at then 11th hour is inexcusable."

Consumer confidence would take a dive as a result of restricted measures, he said.