COVID-19 has caused devastation in the New Zealand retail sector. We started to see sales drop substantially in February, and then collapse in March as the lockdown kicked in. Most retailers were unable to trade at all during the lockdown period, and revenues across the sector were down by about 80 per cent – tough going for an industry where the average net margin is just 3.6 per cent.
The recovery has started with the move to Alert Level 2, but it is going to be a long and slow recovery for the retail sector. Retail NZ expects consumer spending will be depressed for some time, and this will negatively impact retailers over the coming months and possibly years. We will likely see a number of retail firms cease trading, so retailers will need to be focused on playing the long game, delivering outstanding customer experiences, and be nimble enough to keep up with changing consumer demands.
Customers are wanting to #shoplocal and support local businesses. This creates a big opportunity for firms to build on their local credentials to expand their customer base both in-store and online.
The rise of online sales has been an ongoing trend for years, but we have seen a big jump towards more e-commerce during the lockdown, and it is likely that this will continue in the post-COVID world. Customers appreciate the convenience and ability of shopping anywhere 24/7 and having goods delivered for them. Retailers will be looking to improve their e-commerce and fulfilment offerings, as well as reviewing their in-store offerings to be differentiating themselves and making sure they are delivering great value for products and great service.
New Zealand is well-regarded internationally, and goods that are made in (or purchased from) New Zealand often carry a special cachet for people abroad. E-commerce offers a great opportunity for local retailers to deliver great experiences and expand their customer base from the Shore right down to Dunedin, and internationally into Asia, the Americas and Europe.
Retail NZ has a number of resources on its website, including a series of free webinars. Click here fore more info.