Last year the end of Auckland's lockdown saw a big rise in retail spending but will it this time? Photo / File
Last year the end of Auckland's lockdown saw a big rise in retail spending but will it this time? Photo / File
Two major retail magnates are expecting sales to boom once retailers are allowed to open their doors in Auckland on Wednesday.
But others warn that longer-term prospects for the sector could be less rosy as shoppers become more hesitant to go out with Covid in the community.
General retail storesin Auckland have not been allowed to let customers inside since August 18 but have been told provisionally they can open up if the city moves to alert level 3 step 2 from 11.59pm on Tuesday.
Rod Duke, chief executive of the Briscoe Group, said they were expecting to be very busy once Auckland opened back up and his staff were eagerly waiting to get back to work.
"I think we're going to be spectacularly busy … we had about nine phone calls from staff this [Tuesday] morning. [They're] just itching to get back [to work]."
Briscoes managing director Rod Duke. Photo / File
Sir Stephen Tindall, founder of The Warehouse Group, said he was expecting sales to be "through the roof".
"Once we get out of Covid and virtually starting [Wednesday] our stores are going to be through the roof like they were last time."
Asked if shoppers might be more hesitant this time around knowing Covid was in the community, Tindall said it appeared to have made little difference to supermarket shopping.
"I don't think it is making any difference to supermarkets right now. But there will be mandates. From early next year I'm absolutely certain that everybody is going to have to have a vaccination certificate to either work in an industry or be a customer of it, that will be an extra safeguard.
"There might be a little bit of hesitancy just between now and then but the amount of business our company is doing offline in level 2 but also online in level 3 is pretty remarkable. People are definitely in there buying for Christmas."
Sir Stephen Tindall says he expects sales at the Warehouse Group to be "through the roof" when physical stores reopen in Auckland. Photo / File
Greg Harford, head of Retail New Zealand, said when other parts of the country moved from alert level 3 to alert level 2 it did take time for shoppers to return.
"Things were relatively light for the first couple of days and then the weekend was relatively busy probably reflecting a lot of pent-up demand. I imagine the same will be true of Auckland.
"The difference of course is you have got Covid in the community in Auckland - it is going to be different because there will be distancing rules in place when retail opens on Wednesday - there is just a different feel about it - I think we will see a bit of caution by consumers at least for the first couple of weeks as people find their groove again."
Harford said there was real uncertainty in the market about how well retail was going to perform over the next few weeks.
"We have obviously come out of lockdown before but not with Covid becoming essentially endemic in the community.
"It is different and I think we are seeing in other places around the world retail does come back but it doesn't necessarily come back with the hiss and the roar that perhaps we saw last year, particularly in the context of a world where there is a bit more economic uncertainty than there probably was in the middle of last year."
Harford predicted a difficult Christmas trading period for retailers.
"We are already in what is the busiest time of the year. The big challenge for retailers is that supply chains are not as robust as they should be and not all products are going to be available so if you are looking for something particular for Christmas ... it's really a good idea to get that order in early - we are up against it in terms of timelines, there is just not time to get product into the country."
Retail New Zealand chief executive Greg Harford. Photo / File
John Carran, investment strategist and economist at Jarden, said having Covid in the community would change people's behaviour.
"We have seen that overseas - particularly in the United States - if you look at the Google mobility data for even when they have more of less fully reopened, some of those most populous states like Florida, Texas, New York, the number of people visiting retail and pharmacies was still significantly down from pre-pandemic and that is partly because there is still some social distancing requirements there. But also there is a bit of reticence as well, people after a long lockdown get a bit wary of going out."
He said the short-term trading performance of retailers was hard to predict.
"I would imagine in the initial period there will be a surge back to shops. Particularly in the Christmas period. Bear in mind it is very hard to get stuff from overseas at the moment online so if they are looking for Christmas gifts they might have no option but to go into their retail stores.
"But looking a bit further along I think there could be some headwinds there that retail might not see the volume of trade we saw when we were at level 1."
Carran said product retailers could expect to see a higher proportion of sales coming through the online channel on a permanent basis while service-based retailers like hair-dressers and beauticians could continue to struggle.
"Retailers will have to adapt. Those that can't adapt potentially there could be some stress there and that is one of the things the Reserve Bank has highlighted."
Last week the Reserve Bank's Financial Stability report warned that a transition to living with Covid in the community could lead to changes in consumer behaviour.
"While restrictions may ease as vaccination rates increase, living with Covid-19 in the community could lead to changes in consumers' preferences and behaviour.
"Businesses will need to adapt, and some businesses that have stayed afloat to date may not be viable as support schemes wind down. These changes could drag on economic activity."
Carran said next year could be a tougher one for the economy.
"There are some positive factors, the construction sector there is still a big pipeline of work there, that is going to be pretty robust for a while. Exporters should continue to do well as economies open up offshore and economies start to kick-start back into life and also the labour market is tight, wages are starting to go up which puts more money in people's pockets to spend.
"But balancing against that I think with endemic Covid, government support rolling off I think you are going to get some negative factors too - on balance it could be a little tighter than it has been this year."
