Lockdown costs east coast retail $2 billion

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Lockdown costs east coast retail $2 billion

Retailers have calculated the damage caused since the Delta wave hit NSW starting lockdowns across the east coast, with the results coming in;

  • NSW sales have fallen by almost 14 per cent or $1.4 billion
  • The ACT has fallen by 17.1 per cent
  • Victoria has dropped by $450 million or 5.7 per cent since May while
  • Queensland has lost 2.7 per cent or $173 million in sales

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From The Age 28.09.21

Coronavirus lockdowns have cost east coast retailers almost $2 billion in sales with warnings a pre-Christmas surge may be slowed by remaining restrictions and concern among shoppers about contracting COVID-19 in busy malls.

Data from the Australian Bureau of Statistics on Tuesday showed retail sales fell another 1.7 per cent through August to be 0.7 per cent lower than a year ago.

It followed a 2.8 per cent drop during July and a 1.8 per cent decline in June. August marked the first time the retail country’s sector had gone back for three consecutive months since 2000, ahead of the introduction of the GST that year.

The damage has been done since NSW started introducing restrictions. Since May, retail sales in NSW have fallen by almost 14 per cent or $1.4 billion while in the ACT they have cratered by 17.1 per cent, with all of that occurring in August when the nation’s capital went into lockdown.

Retail sales across Victoria have dropped by $450 million or 5.7 per cent since May while Queensland has lost 2.7 per cent or $173 million in sales.

The only jurisdictions ahead of their May level are South Australia (up by 3.8 per cent) and Western Australia, where sales have grown by 4.1 per cent amid expectations of an AFL grand final-inspired surge in September.

As has occurred in previous lockdowns, sales of food through supermarkets increased as people spent most of their time at home. Food retailing lifted by 2.1 per cent in August to be up by 6 per cent since May.

But in a sign that Australians have fully kitted out their home offices, household good sales dropped by 2.3 per cent to be at their lowest point since the start of the pandemic early last year. Spending in cafes and restaurants dropped by 7 per cent, taking it back to May last year.

Australian Retailers Association CEO Paul Zahra said lockdowns were having an out-sized impact.

“Small businesses have been left reeling in NSW, Victoria and the ACT. They’ve been smashed by Delta and the existing government support measures are barely keeping them going. In contrast, retail sales are more upbeat in states that have been spared the pain of lockdowns,” he said.

EY chief economist Jo Masters says what is “normal” retail levels is increasingly difficult to determine.
EY chief economist Jo Masters says what is “normal” retail levels is increasingly difficult to determine.

The federal government, Reserve Bank and economists expect retail sales to jump once lockdowns come to an end in NSW and Victoria.

Commonwealth Bank senior economist Belinda Allen said a combination of pent-up demand and accumulated savings would help deliver a post-lockdown boost.

But she cautioned it would not be the same as last year’s post-lockdown surge in spending.

“We expect the pace of pick up will be bumpy and we expect it to be slower compared with last year’s lockdown because of some lingering restrictions in place,” she said.

“Some consumers will also be initially wary of catching the virus or from coming into contact with the virus and being forced into isolation.”

EY chief economist Jo Masters said the sales figures were a repeat of past lockdowns during which food spending increased by expenditure through restaurants and cafes tumbled.

“The great uncertainty that retailers face after the first three consecutive declines in total retail sales since 2004 will be finding the new normal for spending on household goods,” she said.

“This was the fourth consecutive monthly decline in spending on household goods and cements our view that the wave of spending on making your home more comfortable has run its course, leaving the question of where we’ll find the new normal.”

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