Go Local! Covid-19 economic fallout starts to bite Northland businesses

Classique Souvenirs Paihia owner Mike Watson said his business is down 60 per cent as not many locals are out buying souvenirs. Photo / Jenny Ling

Covid-19 continues to play havoc with the Northland economy and businesses. Reporter Jenny Ling looks into the region's recovery and what is now needed to help.

Mike Watson's souvenir shop in Paihia is stocked to the brim with all manner of Kiwiana from wooded tiki and pounamu pendants to New Zealand made trinkets and fridge magnets.

Before Covid-19 began to bite in March, he was expecting an influx of cruise ships heaving with passengers to open their wallets in his Classique Souvenirs Paihia store, which would see him through the winter.

"We loaded up on stock levels to cater for these cruise ships - but they didn't come," he said.

"So now we're overstocked and there's no one to sell it to."

Business Paihia chairwoman Robyn Stent owns three Cabbage Tree stores in Paihia and Russell selling New Zealand made souvenirs and gifts.

Around 65 per cent of her business has gone, prompting the closure of her Russell store over the entire winter.

Despite calls to "shop local and visit your own backyard first", she's not seen many domestic travellers through the doors of her Paihia stores, including few Northlanders.

"It's really tough," Stent said.

"People are still insecure about job losses, and when people are insecure, they don't go retail shopping.

"We are struggling through. Borders have got to open soon, especially to Australia. People here are mentioning tumbleweeds".

Business Paihia chairwoman Robyn Stent has closed her Russell shop over winter due to a lack of sales. Her Paihia stores are still open. Photo / Jenny Ling

Months of strict Covid-19 restrictions have taken a toll on Northland businesses.

At least two cafes and a Flight Centre store in Kaitaia have become permanent casualties of the virus, and some businesses remained closed until level 1.

It isn't yet known how many Northland businesses have shut up shop for good.

Neither the Northland Chamber of Commerce, Northland Inc, or the three district councils have any figures on the topic.

Northland Chamber chief executive Steve Smith said none of its 491 members has closed as a direct result of Covid.

Smith said he has asked "a variety of sources" in local and central Government, including the Inland Revenue Department and Ministry of Social Development, to find out just how many casualties there have been.

"At this stage no Government department has put together any specific information based on liquidations caused by Covid," Smith said.

"There's no consolidated information. We're looking, but we're not finding it at the moment."

Kaitaia Business Association chairwoman Andrea Panther said at least two eateries had closed in the Far North town as a direct result of Covid.

They include Hope Café, one of Kaitaia's small but popular eateries which opened more than six years ago at the Hope Christian Centre.

The Vault bar and café also fell victim to the virus, Panther said.

The business association has been offering various lifelines to local owners, including sharing information where they can get help.

"For Kaitaia, we don't rely on the tourist industry as much because the tourists go to Paihia and up the coast, so our businesses are just trucking along," Panther said.

"We're fortunate our locals are supporting locals – there's a real push and it's definitely helping."

But Panther admits, once the wage subsidy extension ends, "that will be a telling time".

The Vodafone store on Cameron St in Whangarei was closed until level 1 due to Covid-19. Photo / Michael Cunningham

The Vodafone store in the Cameron St Mall in Whangārei had closed at level 4 and stayed that way until level 1.

A spokeswoman said all Vodafone NZ retail stores were closed to foot traffic under levels 3 and 4 and retail staff were redeployed to assist customers online from home.

In the case of two stores - Cameron St in Whangārei and Devonport Rd in Tauranga - staffing levels were not sufficient to open.

"Any staff members usually assigned to these stores ... were redeployed to other Vodafone stores in the area," she said. "At level 1 these two stores will reopen."

Northland businesses were champing at the bit to get to alert level 1, which finally happened on June 8.

This means all restrictions on businesses and gatherings are lifted and physical distancing is "encouraged" instead of being mandatory.

But it's a transtasman travel bubble that retailers and tourism operators, particularly those in small tourist towns like Paihia, are crying out for.

While domestic tourism brings in a large chunk of Northland's $1.1b in visitor spending, the next biggest market comes from across the ditch.

Watson said this certainly applied to his business.

Though he's introduced a range of different products to appeal to the domestic market and taken up the wage subsidy for staff, sales are still down 60 per cent from the same time last year.

"The first thing is getting the transtasman bubble fired up as soon as we can," Watson said.

Northland Chamber of Commerce chief executive Steve Smith is concerned about consumer spending going forward as companies shed staff. Photo / Michael Cunningham

Yet the Government still doesn't have a clear timeline on opening our borders to Australia.

Deputy Prime Minister Winston Peters said recently New Zealand would likely be waiting on Australia "because its federal system was more complicated".

Prime Minister Jacinda Ardern has said there was no timeframe "because Covid hasn't had a timeframe".

One thing is certain - the region's jobless continues to rise.

The latest Ministry of Social Development figures show there are now 11,435 Northlanders on the Jobseeker benefit.

That's 11 per cent of the working-age population now receiving benefit support, an increase of 2.2 percentage points from the beginning of the year.

Companies of all sizes across the country are shedding vast numbers of staff including Air New Zealand, Carter Holt Harvey, Copthorne Hotels and the Warehouse Group.

Northland Regional Council economist Darryl Jones said the total number of businesses in Northland dropped by 7 per cent between 2009 and 2013 as a result of the Global Financial Crisis induced recession.

"In terms of the Covid-19 crisis, it is projected the number of people employed in Northland will fall by 10 per cent, or around 7500 people, between 2020 and 2022," he said.

Jones said in addition to the decline in accommodation and food services, some of the highest impacts in Northland will be felt in construction, road transport and retailing.

Greg Harford, chief executive of Retail NZ, said the retail sector continues to face severe pressures due to the pandemic. Photo / file

According to Retail NZ there are 1092 retail outlets across Northland employing around 6700 people.

Retail NZ chief executive Greg Harford said the retail sector continues to face severe pressures due to the pandemic, and future is looking "a bit grim".

Its latest Retail Radar report reveals some 6700 retail businesses in New Zealand are at risk of closure during the rest of the year as a result of Covid-19.

A survey of its members found 24 per cent of businesses either expected to cease trading or were not confident they could continue, and a further 37 per cent said their survival "could go either way".

Smith too is concerned.

Though there was an initial hike in residents splurging on goods and services as they came out of lockdown, he's concerned about consumer spending going forward.

"What we're seeing, particularly in hospitality, is that it's erratic. Before they had a clear idea of the peaks and troughs of their business. Now it's all over the place."

Jones said supporting the Go Local! Campaign launched by NZME, the publisher of the Northern Advocate, as a public call to action to support local businesses, is one way the public can contribute to the ongoing local economic recovery.