Walking through any of New Zealand's city centres is an eerie experience during the country's month-long lockdown; empty streets, shuttered stores and overgrown green spaces.

On Wellington's Cuba Street, lined with iconic eateries, chairs are stacked on cafe tables and neglected plants are yellowed and bent.

With almost half of the country's workforce of 2.5 million people sitting idle at home as part of the effort to curb the spread of the coronavirus, it's difficult to imagine a return to pre-lockdown times. 

Dedicating to going – in Prime Minister Jacinda Ardern's words – "hard and early" against Covid-19, New Zealand will hopefully avoid the exponential growth in cases experienced by other countries. However, it's unlikely to also escape the changed reality to come, socially and economically.

It remains unclear when many businesses will be able to resume trading, or what that might look like. Regardless, many Kiwis are counting down the days until they can get their hair cut, restock their liquor cabinet, visit a local cafe, or buy a burger.

Retailers can certainly expect to see a post-lockdown "relief bounce", experts say. But the bad news is it won't last, and the high street will be struggle street for some time to come.

In short, The overwhelming toll on jobs and businesses has only just begun.

Retail New Zealand chief executive Greg Harford expects there will be significant pent-up demand, benefiting hairdressers, pet groomers, hardware stores, clothing retailers and bookstores.

"We would expect to see an initial surge in demand as consumers seek to have their needs satisfied, but this is likely to drop back quickly as the reality of the new economy bites," Harford says.

When asked if there's a silver lining in the current situation for retailers, he says if there is, it's hard to see.

His comments are echoed by BNZ head of research, Stephen Toplis. "There will be a bounce as there's no spending now, there will be a 'relief bounce', but it won't last."

And it won't be takeaway coffees we're spending on, he says.

Luxury items, or "nice-to-haves", will take a proportionally larger hit, "as they always do", agrees ANZ chief economist, Sharon Zollner. Especially as consumers adjust to wage cuts and unemployment, rising taxes and recession.
People will prioritise things such as haircuts, clothing, and whiteware.

"Some types of spending, such as dinner out, are just lost. People won't eat out five times a week to make up for not dining out during the lockdown," Zollner says.

New Zealand is fortunate in that its exports are centred around food, she says. "People have to eat, even when locked down in their houses."

For that reason, if there are any winners, supermarkets are among them, says Darren McGavie, co-founder and chief coach at Firestation, a Bay of Plenty business growth centre.

"All the previous spend from takeaways, bakeries, butchers, greengrocers and so on, has transferred to the supermarkets.

"You add in that the likes of Countdown have removed sales or specials, they are definitely going to see significant increases in both revenue and profit," McGavie says.

At the other end of the scale, businesses that were struggling prior to Covid-19 will be unlikely to reopen, says retail expert Chris Wilkinson of First Retail Group.

New Zealand has proved not to be easy going even for international success stories such as Top Shop. Some have wondered whether David Jones, which has been closing stores in Australia, might find its commitment to New Zealand wavers, Wilkinson says.

"Agility and adaptability are vital right now, and going forward."

"Any business that was struggling or in subsistence mode beforehand is unlikely to weather this," Wilkinson says.

Towns and cities will need to respond to the changes in behaviour that come with a post-pandemic
society. "Creating the spaces and reflecting the cultures that consumers will increasingly expect of their shopping and hospitality destinations."

 Dunedin couple Rose Khant Aung and her husband, Zin Khant Aung, plan on actively backing their favourite businesses when the restrictions lift.

"If it means cutting back elsewhere so that we can spend more locally, that's what we'll do," Rose Khant Aung says.

The lockdown has made them realise the importance of supporting charities and local clubs, the 26-year-old says.

"We decided, after [the lockdown] was announced, that we'd continue paying our Brazilian Jiu-Jitsu fees.

"To us, it's important that we have a club to return to, and we know how much time and effort our volunteer instructors put in," she said.

Even after New Zealand returns to lower alert levels, health officials have warned the effects of Covid-19 could be prolonged.

When Ardern announced the new alert level system on March 21, ranging from level 1 to level 4 – the latter being lockdown – she said the aim was to slow down a "tidal wave".

Breaking it into smaller waves would, she said, reduce the impact on health and the economy.

But Matthew Goodson, co-managing director of Salt Funds Management, says as a nation of small, and not well-capitalised, businesses, New Zealand should expect a permanent economic "shake up" following Covid-19.

"New Zealand's stimulus has been middling compared to other countries and our restrictions have been much tighter," Goodson says.

"There'll always be a place for premium or neighbourhood retailers, but those in the middle will suffer. We'll see huge consequences for B- or C-grade stores."

Even big-name brands have needed significant subsidies from the Government to get through, including The Warehouse with $67 million, Kmart with $11.9m and Harvey Norman $12.7m.

The number of unemployed people will rise and businesses trading non-essential items will struggle for some time, he says. He expects to see the trend of online-only retailers continue, particularly in the food sector.

Last week, director-general of health Ashley Bloomfield revealed the end goal for the Government was not just to suppress or contain the virus, as the United States and other Western nations are attempting to do, but to eliminate it.

Two weeks in, with the daily numbers of confirmed cases levelling off, there are signs the strategy is paying off. The majority of cases remain linked to international travel and there's little evidence of community transmission.

As an island nation, New Zealand has the advantage of being able to easily shut its borders, and keep them closed for as long as it takes for a vaccine to be developed or the virus to die down globally.

In theory, once the virus has been stamped out locally, domestic life can resume.

Buying locally will probably become a mantra for many, Infometrics senior economist Brad Olsen says.

Shoppers will probably return to retailers who provide more personalised services. "Those that make people feel welcome and catered for, they'll do much better," Olsen says.

Even after shops are allowed to reopen, many consumers will want to stay away. An online presence will be key to survival for many businesses, he says.

"I expect that demand for online retailing will remain."

Even then, Auckland University of Technology senior lecturer on marketing and retailing, Sommer Kapitan, says people are treating packages with suspicion.

She wonders: "Is it worth it to risk infection for myself, or essential delivery drivers and get items delivered so I don't have to go to the stores?"

She anticipates it will take a long time for the retail sector to recover, largely because it will take consumers a long time to recover from a pandemic mindset.

Before people head out to buy a new pair of jeans they'll ask themselves whether they're worth the risk of infection, Kapitan says.

"We've been told to expect a second or third wave of infections as this makes the rounds. Who knows exactly when?"

In environmental psychology, there's a basic theory called stimulus-organism-response which is used when thinking about what makes people approach or avoid certain retail settings.

"The problem is that, for right now and for the foreseeable future, all the messaging and atmospherics are designed to push the 'avoid' button in us," Kapitan says.

"Whether money is tight for us or even if some are lucky enough to keep their jobs and incomes stable, all the store atmospherics are designed right now to deter us from coming in, from lingering, and from filling up our carts.

"That might be hard to unlearn."

Our attitudes towards simple things such as handing over a credit card or punching in numbers on an eftpos machine have changed.

"How long those changes last and how habitual they become will shape the trajectory of our recovery," Kapitan says.

(Source; Stuff, Benn Bathgate, Katie Kennie, Susan Edmunds)

Covid 19 Notice

As the impact of the coronavirus continues to evolve, we face this unprecedented situation together. The pandemic is affecting all of us. At Terra Nova Consultancy Ltd we wish to reach out and update you on how we are addressing it. Our top priority is to protect the health and safety of our employees, clients, and our communities. Our focus on customer service remains at the center of everything we do, and we are fully committed to continue to serve you with our services, and striving to provide our services without interruption.Please listen and act upon the advise given by the Government, only in that way will we together be able to combat this challenge. And as always, stay healthy and keep safe.

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