National Retail Association CEO Dominique Lamb pens this exclusive piece for Ragtrader on what's ahead for retailers.
COVID-19 has acted like a wrecking ball through the Australian economy.
The suite of lockdown measures implemented by the National Cabinet when this virus first arrived in Australia were absolutely necessary, but they have come with considerable economic cost.
With the country set to enter its first recession since 1991, it’s important to note that we are still not out of the woods on the health front.
In recent weeks Victoria has experienced a tragic spike in infections, forcing the State Government to reimpose numerous restrictions.
While, at the time of writing, New South Wales is also enduring small outbreaks but seem to be preventing case numbers from exploding.
All this means that business will continue to experience an uncertain time in the period ahead.
Retail turnover has gone up and down like a yo-yo in the last four months, with the ABS recording steep rises and falls since the pandemic hit our shores.
The panic buying that took place in March saw the biggest ever monthly increase in retail sales recorded by the Australian Bureau of Statistics.
However, this was followed in April by the largest ever drop in month-on-month sales which, by our calculations, cost the retail sector $3.4 billion in revenue.
The JobKeeper program announced by the Federal Government in March has undoubtedly kept many people in jobs that otherwise would have been lost.
While the retail sector understands that this scheme cannot run forever, a sudden withdrawal of this support measure would jeopardise business and jobs.
The volatile economic environment has resulted in unprecedented uncertainty for business over the short to medium term.
It is for this reason that the NRA very much welcomed the extension to the JobKeeper scheme, announced by the Federal Government last week.
While we remain concerned that the future of tens of thousands of businesses nationwide continue to hang by a thread, we’re pleased that the scheme will be maintained until at least March 28, 2021.
While the full rate will be dropped from $1,200 per fortnight to $1,000 per fortnight, we are hopeful that this will provide retailers with some degree of short-term confidence.
The eligibility criteria for JobKeeper will also be modified, with the aim of ensuring that businesses no longer in need of support don’t receive any unnecessary payments.
From September 28 2020, businesses will need to show the requisite decline in turnover in each of the June 2020 and September 2020 quarters, relative to comparable periods.
From 4 January 2020, businesses will need to show the requisite decline in turnover in each of the June, September and December 2020 quarters, relative to comparable periods.
A lack of business certainty has resulted in only one per cent of retailers looking to employ more people at present.
The JobKeeper extension won’t reverse this trend overnight, but will hopefully provide enough breathing space to keep businesses afloat.
It is also crucial that discretionary spending picks up if we’re to save as many businesses as possible in the coming months.
At the beginning of this pandemic the Morrison Government introduced the JobSeeker supplement - effectively doubling the Newstart Allowance - to ensure that consumer confidence didn’t fall off the cliff. Last week the Prime Minister announced that this supplement would continue until at least December, albeit at half the rate from September onwards.
The period ahead remains very much uncertain.
Retailers are committed to ensuring they operate their businesses in a manner that is safe for both their staff and customers.
In the meantime, we need consumers to support local businesses wherever possible and for governments at all levels to provide sufficient support until we have this virus beaten.