Frightening chart shows that malls will never bounce back after closing – with JobKeeper ending as the final nail in the box for retailers
- Experts warn that shopping centers may never recover from the COVID-19 pandemic
- Retail sales fell 1.4 percent – the worst year ever
- Deloitte says September is a red flag for retailers with the end of JobKeeper
Malls will never return after the coronavirus blockage, with high unemployment and a static population likely to crush already struggling retailers, a new report has warned.
The latest data from Deloitte Access Economics predicts a 1.4 percent decline in retail sales in 2020, making it the worst year ever.
The last subscriber to Retail Forecasts on a quarterly basis report (Q2 2020) said that final retail spending data in the quarter of June is likely to contract by four percent due to the COVID-19 lockdown.
In April alone, spending fell by 10 percent, more than offsetting the peak in March, when many Australians made panic purchases to prepare for the upcoming lockdown.
Deloitte Access Economics last quarterly subscription to Retail Forecasts (Q2 2020) predicts a 1.4 percent decline in retail sales growth for 2020
There was a recovery in May as many companies reopened, but the increase is expected to be short-lived and to show a downward trend for the rest of the year.
Deloitte Access Economics partner and lead author of Retail Forecasts, David Rumbens, warned that the recovery path for retail spending was uncertain.
He said many retailers are bracing for a September slump, when the JobKeeper program is expected to end for most recipients, while banks’ moratorium on mortgage payments will also be lifted.
The JobKeeper payment scheme has offered eligible companies affected by the COVID-19 lockdown $ 1,500 per eligible employee every two weeks to help them retain personnel since March.
The money helped companies pay the salary or wages of eligible employees during the pandemic and they, in turn, were refunded the fixed amount.
Mr. Rumbens warned that “the short-term risks of rising unemployment and less willingness to spend will linger, especially as fiscal stimulus programs are lifted in September.”
In the longer term, Mr. Rumbens was concerned about a cut in immigration, as the Australian economy, particularly retail and housing, relied heavily on constant imports from more consumers.
“Even more worrying is the longer-term risk of weak population growth,” said Mr. Rumbens.
“Migration has been a major support for retail spending in the past decade, but with closed borders there is a chance that this tailwind could turn growth into a headwind.”
As part of Australia’s response to slowing the spread of COVID-19, most retailers were forced to close due to social distance measures and state-to-state requirements.
Amusement grounds and sports facilities were forced to close their doors, while cafes and restaurants were limited to takeaway options.
Supermarkets like Coles, Woolworths and Aldi, however, remained open and profited greatly by closing other specialty stores.
However, multinational retailers (pictured), including Coles, Woolworths and Aldi, remained open during the corona virus pandemic, with consumer restrictions on products
Deloitte Access Economics predicts that shopping centers will never be the same after being empty for weeks due to the coronavirus pandemic
Mr. Rumbens labeled 2020 as a ‘tumultuous year for retailers’.
The only sectors that went through a “gold run” included supermarkets, pharmacies and hardware, he said.
“Across the industry, we expect calendar 2020 to record a record drop in real retail sales,” said Rumbens.
The bat’s predictions are from a significant peak to about 10 percent in March due to panic purchases by Australians (pictured) before the nation locked down
“Consumers’ willingness to buy is likely to be plagued by a number of different factors, meaning that a month’s trading experience can be a terrible guide to how the year as a whole is going.”
Six phases for retail spending in 2020
Pre-COVID: Do you remember January / February? Hardly normal. The country experienced devastating fires and some borders began to close. However, for most retailers, trading was in a familiar pattern with modest month-to-month growth.
Stock March: As COVID led to widespread constraints, consumers entered a massive inventory cycle, with the additional essentials spending masking a sharp decline in many discretionary expenditures. This culminated in the strongest monthly growth in retail sales ever.
April slump: The inventory phase declined, reducing spending on supermarkets and related products, while the decline in discretionary spending (particularly cafes / restaurants and clothing) only worsened. The result? The worst drop in monthly Australian retail sales ever.
Can open rebound again: With health problems declining and consumers getting the green light to go back to shopping centers, retail spending was again up sharply. This was helped by pent-up demand and high levels of government support, absorbing the blow that would otherwise have been seen on consumer income.
Recovery growth: Deterring the flare-up, this will be a ‘COVID-normal’ period, in which sales will be supported by an improving economy (picking up a very deep trough), and will continue to benefit from income support measures (JobKeeper, mortgage deferral), access to super etc).
Post JobKeeper slog: September is already flashing for many retailers as the month before JobKeeper’s intended end, and therefore the significant support that many companies (including retailers, of course) have received. That may consider the final phase of retail in 2020 to be a rather bleak phase, allowing many retailers to dream of the support they received when COVID was at its peak.
Source: Deloitte Access Economics
Multinational retailers, including Coles (photo), Woolworths and Aldi, remained open throughout the corona virus, with consumer restrictions on products