ARA welcome Victorian Government's expanded financial support package for retailers

ARA welcome Victorian Government's expanded financial support package for retailers
ARA welcome Victorian Government's expanded financial support package for retailers

EXPERT OBSERVER

The Australian Retailers Association (ARA) has welcomed the Victorian Government’s expanded financial support package for Small to Medium Size Businesses (SMBs) but cautioned it won’t be sufficient to prevent an avalanche of permanent retail closures due to protracted lockdown restrictions.

The immediate grants and tax relief would offer important survival funding for small retailers, but won’t address the fallout of jobs and store closures for medium or larger size retailers which employ the majority of Victorian retail staff.

We are pleased that smaller retailers with payroll of less than ten million dollars can access cash grants and deferred payroll tax. The CBD focus announced today is also critically important, with those retailers more affected than most due to the collapse of all forms of viable visitor numbers since early this year.

However, grants of $10,000 to $20,000 only represent a tiny percentage of the losses retailers are now carrying. Whilst the increased threshold for retailers with larger payrolls is valuable, this remains a very low bar for retail and means there is no support for many of the retailers that represent the household names Victorians know and love. Many of these retailers are unable to access JobKeeper and have no support to offset their considerable losses.

We are also concerned that deferred payroll tax creates yet more mounting debt for retailers already carrying significant deferred leasing costs.

Retailers are committed to the safety of Victorians, but the sector remains extremely concerned about the catastrophic impact of the proposed approach to retail reopening contained in the Roadmap. 

In its current form, we predict the Roadmap measures will mean the permanent loss of up to 50 per cent of Victorian small retail operations that might otherwise survive, leaving many thousands of people unemployed. Some areas of retail, such as CBD retail, will take up to a decade to recover.

The Roadmap means retailers will have been in lockdown for or many months ongoing, in addition to the previous round of lockdowns. And some have been in continuous lockdown since March, which is globally unprecedented and untenable on many levels.

Alternate Covid-safe measures

Covid-19 transmissions within retail remain extremely low, with an ARA members survey last week indicating that 93.4 percent of retailers have had no cases of Covid-19 transmissions in their stores or distribution centres.

We would like to see a much earlier reopening and believe an approach to reopening which is better aligned with successfully working examples, such as NSW, is reasonable to consider.

In addition to the existing Covid-safe measures, retailers would support broader measures, such as:

  • The restriction of people movement to one person per household in the same way we have for essential services and supermarkets in recent weeks. 
  • Mandatory mask wearing by both customers and staff to help protect and mitigate any risk of transmission. 
  • The introduction of Covid marshalls, consistent with the South Australian approach, would be another area our larger retailers would support.
  • Other Covid-safe measures identified by the Victorian Government which avoid strict lockdowns. 

 Retailers are also actively undertaking the Government subsidised (accredited) infection control training, which the ARA provides, in the lead up to re-opening. 

Retailers will be relying on Christmas earnings to help offset their significant 2020 financial losses. With this financial outcome now also in jeopardy, many retailers will be considering permanent store closures.

Accruing leasing deferrals payments will push more businesses to bankruptcy. Whilst we applaud the extension of the national leasing code protections, the legislation requires 50 per cent of rent to be deferred and repaid later, in a protracted lockdown environment this is now a burden that may bankrupt many small businesses in Victoria and weigh heavily on their mental health,"he said. 

The ARA is pleased to see the easing of lockdown timings for beauty businesses, with those businesses now able to open a month earlier on 26 October, in line with hairdressers. This is a point ARA and our sister organisation Health and Beauty Industry Association (HBIA) have advocated for and also provides an important win for a sector which employs and services thousands of women.

ARA Recommended Retail Roadmap

Key recommendations provided to the Victorian Premier last week include the following measures:

  1. Immediate increase in warehouse and distribution centre staffing.

A further six weeks of lockdown ahead for most retailers will place an untenable strain on supply chains not only in Victoria, but around the country. Distribution centres can not only provide an online offset against physical closures, but they take some of the strain off physical stores particularly as we get closer to the Christmas period. The flow on effect of this constraint is that it will mean unsafe levels of pent-up demand are in place by the time retail does reopen.

The ARA requests that warehouse teams, including those in retail distribution centres, and ‘dark stores’ are allowed to increase their staff numbers to full capacity. This can be achieved in two shifts to allow a safe workforce bubble to be maintained. 

These centres have been safely operating at a two thirds arrangement during the recent lockdowns to support online retailing. ‘Dark stores’ are important to include in this provision, as many retailers do not operate warehouse locations and they also help spread the distribution load safely allowing better distancing and workforce bubbles.

  1. Reassessment of case loads

The ARA is concerned that the target case-loads of less than five daily cases is unrealistic and inconsistent with the approach of other jurisdictions. New South Wales has been operating at case-loads in the double digits (generally between 8 - 18) for much of August and remained open successfully and without significant infection spikes. 

We believe that when Victoria reaches NSW levels of containment, retailers should be able to safely open. The ARA supports a nationally consistent approach in line with the nationally agreed trigger for hotspots of a rolling three-day average of ten locally acquired cases per day – 30 over three consecutive days, in line with medical advice.

  1. Bring retail reopening dates forward for low-risk retailers

In light of all of the above considerations, we propose a progressive reopening, bringing the retail reopening dates forward by a number of weeks to allow a more even spread of retail activity prior to Christmas.  

  1. A gradual extension of trading hours

To help reduce the intensity of peak shopping, which will be based on pent up demand and the delayed start to Christmas shopping, we propose relaxed retail trading hours to allow for improved social distancing.

Retail is a broad church - from hairdressers to hardware, fashion to food. A one-size-fits-all model does not appropriately reflect the true safety considerations across the sector. We support prioritisation of opening for: the full staffing of distribution centres (as noted above), regional locations, large retail stores, stand alone and high street locations, and shopping centres, using a hot-spot approach.

 The retail industry is keen to work with the Victorian Government to support a safe and sensible retail reopening plan. We are asking the Victorian Government to consider a holistic view of health and safety considerations.

The stress created by lockdowns and complete financial collapse of the majority of small and medium retailers will have a health flow-on effect that is not currently being addressed or measured.

Many retailers may not only lose their life’s work, but face a legacy of permanent unemployment including many young people and women, with retail as a largely female workforce. 

With Victoria as Australia’s capital of freight and distribution, the lockdowns have also financially impacted retail operations around the country.

Paul Zahra is the CEO of The Australian Retailers Association.

Tags: 
Retail COVID-19

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