UPDATED: Retailers Face Close Down PM, QBE Tipped To Cut Insurance Risk
Despite pleas to both Federal and State Governments consumer electronics and appliance retail stores face being shut down from Monday of next week according to several sources.
Scott Morrison says the business hibernation policy, when it is announced, will spread the financial burden across several parties, including the business itself.
“There will be landlords who will suffer. The banks will be having to make arrangements with them,” the Prime Minister said.
“Whether councils are involved in providing waivers on rates, things of that nature that, will be something states work through.
“Whether land tax will be relieved for those who have tenants in a distressed situation – all of these are what we are working through. It isn’t simple.”
One option that was being considered is selective shutdowns based on suburbs affected by the Coronavirus. T
he decision to close retailers is being left to State Governments however they are concerned that consumers in a shutdown suburb will move to another suburb to shop.
Stores that are inside shopping centres where food courts have been closed down and other retailers have simply quit are already witnessing a dramatic slowdown in business.
ChannelNews has also been told that QBE Insurance a major supplier of risk protection for distributors is also set to make changes to their risk with an up to 50% reduction in exposure, several distributors have said that they have already applied for loans from their banks.
A major supplier said that going forward CE retailers are going to face stock shortages and that in the short term as retailers move to online selling stock is “set to be king” with some retailers offering better margin deals to suppliers to get hold of stock.
ChannelNews understands that Officeworks whose business has been booming has been offering additional incentives to suppliers to supply them ahead of other retailers.
“Officeworks who have external logistics and warehousing are in a great position to trade online if the Government closes down retail stores on Sunday night” said a major supplier to Harvey Norman.
They added “the battle for CE retailers will be rent, the laying off of staff and the fact that millions of dollars’ worth of stock is going to be sitting in empty stores possibly for up to six weeks. Suppliers are still going to want to be paid for this stock”.
Another supplier said, “QBE are going to want to see balance sheets and proof that businesses can sustain a downturn, or they will switch off accounts who then face having to take the risk on stock. We are in terrible times and some business especially small businesses will struggle”.
Among the retailers who are set to be protected are Harvey Norman stores where the retail store is owned by Harvey Normand and Gerry Harvey.
“Harvey Norman franchisees who are paying rent will be asking Harvey Norman for franchisee help” said a NSW franchisee.
A major accessories manufacturer said “Several big retailers are pressuring brands to take back stock. They want the stock removed from their books. The view is that the stock will be the liability of the supplier until it is sold online. This relates to stock that is already in stores. The issue is getting the stock out of the stores into a warehouse” they said.
Another big issue for CE and appliance retailers is going to be rent.
In breaking news Finance Minister Mathias Cormann has flagged that commercial and residential landlords will have to wear some of the “pain” by granting rent relief due to the coronavirus economic downturn, as governments prepare to lead by example and waive rent for business tenants
Minister for Finance Mathias Cormann says landlords will have to wear some of the “pain”.
The AFR said that ahead of a national cabinet meeting of federal and state leaders, Senator Cormann also flagged a third economic rescue package would be announced in the “next few days”, on top of the $189 billion in government spending and central bank lending measures taken so far.
After today’s video meeting of the prime minister and premiers, governments are expected to lean on landlords to give relief to commercial and residential tenants who lose business and employment income due to large swathes of the economy going into virtual shutdown.
For some it’s not all doom & gloom, Linfox, owned by trucking billionaire Lindsay Fox, has been running 800 trucks a day across Australia in the past two weeks. During the Christmas peak the company ran 500 trucks a day.
According to CBA data released on Tuesday, food spending over the past week was up 49.7 per cent on the same week a year ago, with grocery store and supermarkets sales up by a stunning 74.1 per cent.