2 Sep 2020

New Zealand retailer survival 'on a knife edge'

7:21 pm on 2 September 2020

Business confidence has taken a hammering since the return of Covid-19 to New Zealand, according to a new report from Retail NZ.

Auckland pedestrians queen street generic

Photo: 123RF

As customers keep their distance and border restrictions stifle supply chains, it warns 10,000 businesses could be on the brink.

The patter of pedestrians and the rumble of traffic is returning to downtown Auckland, but High Street gift and souvenir store Pauanesia manager Kerran Cobb said the dropoff in customers began about a week before the city's second lockdown.

She said that was a concern to local retailers who thought they were through the worst of Covid-19's impacts.

"I think everyone is quite worried about - if this happens again it's kind of like another nail in the coffin," she said.

Retail NZ's August survey showed 90 percent of retailers with stores in Auckland reported a drop in sales and the super city's lockdown had hit businesses around the country - with 53 percent of stores outside Auckland experiencing a sales drop.

Adding to the grim outlook was 13 percent of retailers saying they weren't confident their businesses would survive the next 12 months. Another 23 percent said they were on a knife edge and it could go either way.

It is not just about the number of people buying products - getting goods on the shelf from overseas was proving difficult for 73 percent of businesses surveyed.

Retail NZ chief executive Greg Harford said it wasn't New Zealand's border where the problems are happening.

"The biggest problem really seems to be those international shipping ports. There's less ships being loaded up. It's taking longer for products to get through foreign ports," he said.

Among those waiting for overseas shipments was High Street cigar store Havana House, where retail assistant Josh Holtom helps distribute products to another 40 stores around the country.

"So freight has actually been a little bit difficult for us to maintain. We are a couple of orders behind. So where a wholesale customer has ordered this month that we ran out of last month we've had to buy something else to essentially fill that gap," he said.

Supply issues had also been felt a few doors down at Unity Books, but manager Niki Ward was keeping positive.

She credited being an independent store, with base of loyal customers, for keeping her bookshop bustling.

Unity Books manager Niki Ward.

Unity Books manager Niki Ward. Photo: RNZ / Katie Todd

Unity Books had also launched an online store, and she said businesses in the book trade were putting their heads together online to overcome supply issues.

She was optimistic trading would not dwindle further heading into the busiest time of year.

"I'm positive because I've seen what effect books have for different people in different situations. It is an essential service. We bring laughter and life into people's homes. I think we're going to have a great Christmas - it feels like we're going to have a great Christmas."

However, the outlook wasn't so rosy for retailer The Warehouse - today proposing cutting up to 750 jobs in a restructure.

The company said it had been consulting with staff and unions since June and expected the cuts would affect 320 full-time equivalent jobs, or between 500 and 750 roles.

Harford said building consumer confidence was key to keeping other retailers afloat, and he said there may need to be more fiscal stimulus from the government as a way of achieving that.

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