RSi COVID-19 Insights from Around the Globe – New Zealand & Australia
Nigel Huxtable, Oceania Sales Director, New Zealand & Australia Retail Update – June 9th
Australia & New Zealand FACING the COVID-19 Challenge
The first COVID-19 cases were detected in Australia and New Zealand by late January and early February. Both countries implemented lock down containment strategies very quickly in March. After nearly two months and the suppression of community transmission, Australia and New Zealand are now opening up after locking down both populations and closing borders. With a low death rate of approximately ~1.5%, as compared to other global hot spots who are seeing over 10%, both countries benefited from contained infection and control as well as geographic isolation.
New Zealand went for an “eliminate” strategy – to get rid of the virus completely – while Australia opted for more of a “suppression” approach. The lockdown regulations in both countries were more similar than different as people were asked to physically distance from each other and were only allowed to go outside to do essential shopping, outdoor exercise, seek medical care, or go to work as an essential worker. New Zealand’s lockdown efforts were centered on staying in your “bubble” while Australia’s focused more on limiting activity. Activities were restricted where people could encounter each other in close proximity – gatherings, pubs, cinemas and gyms.
As of early June, New Zealand had nine days with no new infections, one remaining active case and no COVID-19 cases in hospital. The probability of New Zealand being COVID-19 free is high but they may need another 20 days before they can say have eliminated the virus completely. Australia is still seeing cases daily, but numbers are low. All cases are being tracked, including whether the source of infection is overseas or community related and if there are any clusters.
Where to Now?
Australia and New Zealand are looking to open a travel bubble between the two countries to restore economic advantages, as they are historically majority trading partners and tourism neighbors.
CV-19 Tracer apps are available in Australia and New Zealand to better implement tracking and tracing of infection.
As of early June, New Zealand is moving to level 1, which returns the country to normal activities as the virus is now contained. New Zealand is now preparing to relax its COVID-19 restrictions to alert level 1 from as early as Wednesday, June 10, which would end physical distancing and size restrictions on gatherings. However, modelling suggests removing limits on large gatherings will increase the risk of a very large new outbreak from 3% to 8%. To reduce this risk, New Zealanders will need to continue avoiding the three Cs of possible infection: closed spaces, crowded places and close contact. New Zealand is now very close to its elimination target, but there is still a 5% chance of undetected cases.
What Are the Challenges?
Both economies have been impacted by the drop in GDP due to companies and businesses not being able to operate during lockdown, which led to an increase in the unemployment rate. This has required government intervention and wage subsidies – a similar outcome to our global friends and neighbors. We could see a risk of recession and longer-term macroeconomic after affects from the pandemic for many years. Additionally, interest rates have dropped and will be low, which will help governments manage the extra borrowings needed to prop up and restart the economies. Private consumption has and will continue to be lower as people re-adjust and save rather than spend.
In terms of global impact, China is a major trading partner for both economies and a large percentage of tourism visitors. Tourism is 3% and 6% of GDP for Australia and New Zealand respectively, as well as the linked employment job advantages of the sector, hospitality and retail.
Impact on Retail
Online grocery skyrocketed in March as panic-buying Kiwis turned to the internet to order supermarket home deliveries amid the first wave of CV-19 hitting local shores. The focus on groceries led Kiwis to spend 24% online with local retail stores, and 18% less with international retailers. New Zealand entered its hardline alert level 4 COVID-19 lockdown on March 25 at 11:59pm, bringing most of the nation’s retail stores to a grinding halt. Online deliveries of groceries and medicine were able to continue from the start of alert level 4, but most other retailers had to cease trading. That changed later during the lockdown when some retailers were permitted to also sell other products online and deliver them, such as laptops and other items deemed essential to those working from home.
In Australia, retail turnover surged by a monthly record of 8.2% in March as consumers rushed to stockpile groceries and office supplies ahead of COVID-19 lockdowns. Shoppers frantically bought food staples and electronics, which drove retail trade up by $2.2 billion to $30.04 billion for the month. Monthly turnover doubled for products such as toilet and tissue paper, flour, rice and pasta between February and March, while turnover for canned food, medicinal products and cleaning goods increased by more than 50%. Strength was also seen in other non-food sub-groups; for example, in electrical and hardware, where business reported an increase in sales of items related to the set-up of home offices. The rise in supermarket retail turnover reached a peak in mid-March before levelling off at the end of the month. The boost to spending has unwound since as households ease on their panic buying.
Brick-and-mortar retailers, cafes and restaurants are now opening up again in both Australia and New Zealand with new rules around safe commerce.
Consumer behavior and buying habits have changed, and only time will tell how much of this becomes pervasive, much like working from home more often. Social distancing is the new normal for now, and will continue to impact our day to day living. Our communities are learning to work in news ways, with increased responsibilities on employers and businesses to provide health related services that protect employees and patrons.
A view from 100 years ago seems like déjà vu.