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Online Sales Surge As PM Says Lock Down Will Not Be Lifted Any Time Soon

As traffic to retail stores fall by up to 70% retailers such as Bunnings, Officeworks, Big W and JB Hi Fi are witnessing a surge in demand online, but there is little chance of the lockdown being lifted in the short term according to the Prime Minister.

Google research shows that searches for brand names such as Bunnings, JB Hi Fi and Officeworks more than doubled in March and have surged during April as consumers work from home while time out to do home repairs.

UBS analyst Ben Gilbert claims that while JB Hi Fi like-for-like sales have risen strongly this calendar year, boosted by demand for work-from-home equipment, UBS expects like-for like-sales to fall 15 per cent in the June quarter and by at least 10 per cent in each of the next three quarters.

“With online only about 6 per cent of sales for JB Hi-Fi, if online sales rise 50 per cent this is only a 3 per cent point benefit to sales,” Mr Gilbert said.

The surge in demand for online retailers comes as Australia is heading down a slippery slope with double digit unemployment tipped next month due to the coronavirus pandemic with questions raised as to whether there will be cash or credit around for online sales going forward.

Treasurer Josh Frydenberg said more than 80,000 businesses had registered for the JobKeeper wage subsidy and that without it the situation could be dire.

He claims that the spike in joblessness would be twice as bad were it not for the $130 billion JobKeeper payment with some tipping a 15% unemployment rate.

Later today (Tuesday) the Treasurer is expected to make a statement regarding the unemployment situation and when Australia could possibly see a relaxation of the work from home mandates.

This morning Prime Minister Scott Morrison poured cold water on the idea of the National Cabinet relaxing lockdown measures for “many weeks”, saying although the curve appears to be flattening, it is too soon to presume the crisis is over.

“We can’t be complacent. We have seen what happened in Singapore most recently and Sweden and other countries,” the Prime Minister told Sunrise.
“If you take your eyes off this thing, he gets away from you so we do need to understand what the prerequisites are and the things we need to achieve before we can start to ease some of those restrictions.

“We will be having the discussion on Thursday and a lot of scientific work is being put into that and we have looked into the experience of other countries and we are hopeful that at some point, we are hopeful that at some point, we can move from the phase we are currently into a new phase, but I do want to caution Australians that we’re not in that phase yet…and we’re many weeks away from being in a phase like that”.

Mr Morrison says the government’s first priority is to reopen workplaces, particularly in struggling regional areas, rather than recreational facilities or re-permitting travel.

“I think, but we need to get our construction industry going, our infrastructure programs, Manufacturing industries. Our agricultural sector,” the Prime Minister told Sunrise.

Morrisons comments come as Treasury analysis reveals estimates that the unemployment rate will climb from the pre-pandemic level of 5.1 per cent recorded for February, to a peak of 10 per cent in the June quarter.

Currently online retailing is the only bright spot for bricks-and-mortar retailers struggling to stay afloat and while the New Zealand Government has handed out millions to the likes of Harvey Norman, The Warehouse Group and Kmart Australian retailers are now having to put their future around online sales which have more than doubled since the COVID-19 crackdown on non-essential activities, generating much-needed revenue to help meet costs.

The Australian Financial Review claimed that Super Retail Group chief executive Anthony Heraghty was counting on Easter to provide a much-needed revenue boost after sales at BCF and Macpac stores were hit by the bushfires. But as thousands of Australians were forced to ditch their Easter camping plans, the outdoor leisure retailer pivoted its marketing, urging customers to camp in their backyards and keep fit at home.

Bunnings Managing director Mike Schneider said launching the online store had proved to be the right move, despite initial scepticism from investors.

“We now have click and deliver live in every state and territory – it’s a fantastic outcome and it could have been very different,” Mr Schneider said.

“For those that speculated in the market we didn’t need an online business, I think the reality we’re living in, unforeseen as it was even a couple of weeks ago, it proved to be a pretty good call.”

David Jones’ online sales rose 108 per cent in March, although total sales fell 19 per cent.

According to Australia Post data, parcel numbers from department stores have risen 184 per cent year on year.

“We’re seeing a big increase in our parcel volumes, similar to what we experience during Christmas time and during online sales such as Black Friday and Boxing Day,” an Australia Post spokesman said.

Analysts are tipping that sales at JB Hi-Fi and Harvey Norman are expected to fall sharply for four quarters as the pandemic triggers another housing market slump.

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