Retail spending plummets during level 4 but bounces back in level 2

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Spending at pharmacies and vegetable shops in alert levels 3 and 2 was above the same period in 2019. Photo credit: Getty.

Retail spending during the COVID-19 lockdown dropped to around half the levels of 2019, but during alert levels 3 and 2, for retailers such as pharmacies and fruit and vege shops, spending was a lot higher.

Paymark electronic card data from March 26 (the start of lockdown), to May 17 (including the first four days of alert level 2), shows a mixed picture. Spending at dairies and supermarkets remained high throughout the period, while at petrol stations, spending remained down.

During alert level 3, overall retail spending was down 35 percent. However, in alert level 3 and the start of alert level 2, spending at pharmacies and vegetable shops was higher than in the same period in 2019.

In the week of May 11 to May 17 (three days under alert level 3 and four under alert level 2), spending was down 11 percent across all retailers, compared to the same week in 2019.

In the first four days of alert level 2, spending at food retailers, garden centres and appliance stores jumped higher than in 2019. However, for other retailers, such as those in hospitality and some clothing and footwear stores, spending has remained low.

Further details of spending across retail groups at each alert level is below.

Biggest bounce-back in spending under alert level 3 and 2

Paymark data shows that spending at pharmacies and vegetable shops was up around 13 percent in alert level 3 compared to April/May 2019.  In the first four days of alert level 2, (May 14 to May 17), spending was also 27 percent higher.

Spending at vegetable shops in alert levels 3 and 2 was above the same period in 2019.
Spending at vegetable shops in alert levels 3 and 2 was above the same period in 2019. Photo credit: Supplied.

Retail groups with a jump in spending under alert level 2

Under the 'most improved' spending category are takeaway shops, specialist food shops, liquor stores, garden centres and retailers selling electronics, appliances, hardware and floor coverings. 

Paymark data shows heavily reduced spending for this group during lockdown, still down by 21 percent in alert level 3.  In the first four days of alert level 2, spending increased, running at 30 percent above the same period in 2019.

Retail groups with flat spending

Around 28 percent of retailers experienced a severe drop in spending during lockdown, which only slightly improved during level 3.  At the start of level 2, spending still averaged 7 percent below the same period in 2019. Examples of retailers in this category are clothing and footwear retailers, gift shops, sportswear stores, restaurants, cafes, hotels and motels.

Paymark said that there was wide variation in this group, for example, spending at some clothing and footwear retailers increased significantly under alert level 2, while at others, spending was still well down. Due to COVID-19 restrictions, most hospitality retailers continue to experience spending well below a year ago.

Tuesday marks almost a week of trading under COVID-19 alert level 2, with malls and other retailers now operating under distancing and hygiene rules. 

Although recent spending at retail shops such as pharmacies, vegetable shops and electronics stores is currently above 2019 levels, rising unemployment and ongoing uncertainty may result those early peaks in spending becoming more subdued.  

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