COVID and Retail: Negative Sales Growth Expected
As NSW records 78 new cases of COVID-19, and Melbourne’s lockdown extended until at least July 27, analysts are warning that the retail sector will be hit with huge financial losses.
Yesterday, the Australian Retailers Association called for a national approach to be put in place, as South Australia also closed its retail sector.
The ARA noted that $7 billion was at risk with the NSW and Victorian lockdowns, with a further $250 million of retail trade going begging in South Australia.
ARA CEO Paul Zahra called the closure of non-essential retail “a devastating blow at short notice,” for the sector.
“This is particularly damaging for small businesses that will have to close, which just compounds the pain they were feeling from the sluggish Covid recovery.
“There’s too many inconsistencies across the states and territories whenever new restrictions are put in place. We still don’t have a clear definition of ‘essential retail’ which just adds to the confusion for businesses and consumers.
“This creates more pain and chaos for businesses with a national footprint, as their stores are affected in different ways depending on what city they’re in.”
JB Hi-Fi today warned that its July sales had slowed, suffering “some disruption and variability” due to the continued lockdowns in Melbourne and Sydney.
Shaun Weick, analyst at investment firm Wilson Asset Management told SMH that the lockdowns were likely to compound retail’s already sluggish form.
“The majority of retailers, especially those ones that were COVID beneficiaries, were likely to report mid-to-high single-digit negative sales growth through this period on strong comparatives,” he said.
“This has been further compounded with the latest round of lockdowns.”
Commonwealth Bank chief executive Matt Comyn says that, historically, the Australian economy has bounced back after short-term setbacks, but there are rocky times ahead.
“What we’ve seen is once the health situation is under control, we’ve seen a rapid rebound in the Australian economy and the labour market. But there’s no question that over the next several weeks, we’re going to feel that directly in terms of the output for the economy.”