Coronavirus: Challenges ahead for big box retail in post Covid-19 world
Friday, 15 May 2020
Expect to see big box retailers aggressively compete for your dollar in a bid to keep their doors open in heartland New Zealand.
Bunnings Warehouse signalled seven possible store closures in regional or rural towns, affecting 145 staff and the forecast is for similar 'consolidation' of big box stores as a result of the economic fallout of Covid-19.
Retail NZ Chief Executive Greg Harford said large format retail stores have traditionally been popular in regional towns and will have an important part to play in a post Covid-19 world.
Big stores act as a drawcard for people to stay in regional towns for their shopping.
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'Overall though, we are likely to see the number of retail stores shrink as a result of Covid-19.
'We don’t yet know the full scale of the economic recession that we will face but a big downturn is likely to be accompanied by a reduction in consumer spending which will flow through into store networks.'
Infometrics Senior Economist Brad Olsen agreed and said forecasted job losses meant people were likely to be more frugal when it comes to spending.
He expected to see some 'aggressive pricing' from big box retailers in the next few months.
'There will be less money in the pockets of consumers and people are going to be shopping around a lot more.
'Big box retailers will be watching that closely because they'll want to make sure they can keep their market share.'
It could force more closures if retailers could not keep costs down.
He was surprised by the proposed Bunnings store closures in Cambridge, Te Awamutu and Putaruru in the Waipā and South Waikato districts of the Waikato.
It was one of the regions likely to bounce back faster than others, because of its strong rural and food processing sectors.
'But talking to a lot of people in the business sector, it did seem the amount of money coming through the door at level 3, was a lot lower than expected.
'And that may well prompt some swift changes from retailers.'
Olsen said online shopping was already a threat to traditional high street business but the lockdown had accelerated consumers' move to contactless commerce.
Waipā District Council's Group Manager of District Growth Manager Wayne Allan said commercial activity in the district looked promising, in the short term.
The council is surveying its building and construction industry and most are keeping staff with projects on the books through to the end of the year.
Resource consent applications for the past three weeks were on par with pre-Covid activity and some major projects were in the pipeline.
It included a new trade depot near Hamilton Airport, worth $24m; a new medical centre in Cambridge, $1.5m; a new childcare centre in Cambridge, $1.6m and two new cool stores for Whitehall Fruitpackers, $3.6m.
'We are still getting big investment in the district, how long it will go after three or four months, that's a bit uncertain, we just don't know that.'
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