COVID-19 alert level 3 puts hospitality and retail businesses in a difficult predicament with many covering costs with limited or no income, business leaders say.
Following three new cases of COVID-19 confirmed in South Auckland, Auckland went into COVID-19 alert level 3 at 11:59pm on Sunday for a provisional three days (alert level 2 for the rest of the country). It comes less than six months since Auckland businesses came out of COVID-19 alert level 3 on August 30 - and many are still recovering.
As businesses are still responsible for paying staff even if they’re closed and others are operating on significantly reduced income, Restaurant Association chief executive Marisa Bidois is hopeful the Government will reinstate the COVID-19 wage subsidy.
"With no wage subsidy being offered for 72 hours, this leaves owners in a difficult predicament with no income coming in to cover the cost of closing (or reduced trading) over the three days," Bidois said.
Having operated through COVID-19 alert level three twice before, business processes for online ordering and contactless pickup are already set up. But only some cafes and restaurants are expected to open for contactless takeaway services.
"The takeaway model doesn’t work for every business and feedback from previous lockdowns has shown that for [many] businesses, revenues are not high enough to justify the cost of opening," Bidois said.
"We expect that establishments will look at the returns from the two previous lockdowns before deciding whether to offer this again."
Referring to COVID-19 alert level 3 as “heartbreaking” for many businesses struggling to recover after the 2020 lockdown, Retail NZ CEO Greg Harford said retailers are bracing themselves for a drop in spending.
"Based on past experience, we expect to see a significant reduction in shopping while the restrictions last, both in Auckland and throughout the rest of the country," Harford said.
"Retail NZ thinks the Government needs to come to the party now with financial support for those businesses which are effectively forced to close by the restrictions."
As with hospitality, retailers are now better at managing alert level restrictions. Those businesses already offering online sales or click and collect services will continue operating.
"Those businesses are able to keep selling, so long as goods are collected without contact between people; or delivered in a contactless way.
"Businesses that don’t already have these systems in place are unlikely to get them up and running before Wednesday," Harford added.
Shoppers outside of Auckland (and those visiting supermarkets, primary produce retailers and pharmacies in Auckland) are reminded to stay two-metres apart and use the COVID-Tracer app.
"This is a very challenging time for everyone, and Retail NZ is asking customers to maintain social distancing and be patient if there are delays during their shopping."
Statistics New Zealand electronic card data for January shows compared to January 2020, actual hospitality spending was down $60 million (4.9 percent). The fall was due to lower spending on accommodation (food and beverage spending was up $22 million). Actual retail spending was up $115 million (1.9 percent) year-on-year. But compared to December 2020, seasonally-adjusted figures show retail spending dropped by $24 million (0.4 percent).
Speaking on The AM Show on Monday, Prime Minister Jacinda Ardern said if the COVID-19 alert level 3 lockdown is longer than 72 hours, the Government expects to offer businesses support.
"After that 72 hours, if we’re in a situation where we tip into restrictions that take us past seven days, that’s when we kick in the business support," Ardern said.
"They’re retrospective, so essentially they’re back paid."
Provision has also been made to help businesses that rely on New Zealand being fully operational, even those outside of Auckland operating under COVID-19 alert level 2 restrictions.
"We’ve got an extra form of support for those businesses who can demonstrate a decline in revenue even if they’re not in that area," Ardern added.