Most Australian retailers have been permitted to operate as long as they are able to comply with social distancing regulations (of 4sqm per person). These retailers include discretionary categories such as fashion, gifts and homewares. However, many Australian retailers have chosen to close because of global imperatives (such as local stores of international brands), staff safety or simply total lack of foot traffic in the location of their store. Those businesses that require close contact, such as hairdressers, nail bars and other beauty retailers, have been required to shut physical stores.
The closure of physical retail - combined with huge home-based populations and captive audiences - has generated a large uplift in online sales. Retailers with effective e-commerce capabilities are faring best, however consumer sentiment is at an all-time, historic low. Westpac recorded the biggest fall in Australian consumer confidence in its 47-year history of doing its survey, from 91.9% to 75.6%.
Over the last month, different categories have experienced lifts and drops:
UP: Skincare, vitamins & supplements, leisurewear, at-home beauty, DIY and craft, gardening.
DOWN: Luxury goods, makeup, fashion, shoes, bags, discretionary expenditure e.g. umbrellas, handbags.
Supermarkets and pharmacies have become the major physical channels and brands selling through these have seen massive, yet unsustainable spikes. New Zealand companies without Australia-based stock have faced challenges during this period. Demand for non-essential product and/or product sold through physical retail has been severely reduced.
In addition, major cashflow issues in their reseller network mean some New Zealand companies are not being paid in full or on-time, or orders are reduced or cancelled. Those who sell through independent or specialist retailers have seen their retailers going through major woes. Sadly, many channel partners will not survive this.