Richard Goodman, managing director of duty free retailer Heinemann Australia, told Inside Retail that the business is “devastated” by the announcement.
“Passengers and our team remain the oxygen to our business and without both, we are kneecapped in our ability to remain ready to support a resumption of trade,” he said.
Since the closure of international borders in March 2020, Heinemann’s sources of income have “almost completely slumped” due to a 95 per cent reduction of international travellers. And a recent decline in departing Chinese nationals has also had a significant impact on the business.
“During its long-standing history of 140 years Gebr. Heinemann has seen many crises. However, the scale of this pandemic is simply unprecedented,” Goodman said.
“Our entire Gold Coast team is still in stand down mode, since March 2020.”
Heinemann opened a store in Sydney’s CBD around the same time, but Goodman declined to comment on the store’s performance and whether there were plans to put more focus on non-airport locations.
He said the whole travel retail community and their suppliers will feel the effects of this decision.
“We’re an ecosystem, so we can’t operate without promotional companies that support us, without the brands that support us, the production workers on the factory floor of [craft spirits businesses] Four Pillars or Archie Rose – we’re a huge part of their business. There’s downstream impacts to this as well, it’s not just us.”
The government’s support package includes International Aviation Support which aims to help international passenger airlines maintain more than 8,000 core international aviation jobs. There is also an extension to the SME Loan Guarantee Scheme, and the size of eligible loans increased from $1 million to $5 million. But Goodman says rising debts won’t help the business.
“We don’t need increased debts,” Goodman said. “We need fundamental support for an industry that’s been decimated through no fault of its own.”
Job losses inevitable
This sentiment was echoed by the Australian Retailers Association (ARA), which said job losses in the sector are now inevitable post JobKeeper.
“Retailers like duty free shops in international airport terminals are in crisis – some have lost 90 per cent of their revenue since the pandemic started and they can’t afford to hang on for much longer,” ARA CEO Paul Zahra said.
“Cheap loans … just add to their mounting debt burden. While it might cover wages and business costs in the short term, it doesn’t address the long-term challenges, income shortfalls or the mental health challenges that accompany business owners and their specialist teams.”
While the federal government has hinted at additional support measures in the May Budget, Zahra said that’s too far away for these companies.
“These businesses need additional support now. Thousands of jobs will go between now and then.”
The ARA established a Travel Retail Advisory Committee last month to advocate on behalf of the industry as the JobKeeper scheme draws to a close. Zahra said the closure of the scheme, on March 28, will have far reaching effects on the retail industry.
“There are sections of retail which contribute billions of dollars to our economy that are still struggling and desperately need targeted support. Travel retailers and CBD retailers, most of which are SMBs, face an uncertain future when JobKeeper ends in a couple of weeks,” he said.
JobKeeper played a significant part in assisting Heinemann through the pandemic, and without it the business will not be able to build back.
“Letting go of team members means years to rebuild, along with not being able to swiftly respond to border openings when they occur, which is what we’ve been frequently doing,” Goodman said.
“We need to see an extension of JobKeeper or equivalent industry package. We need a decision to be made ASAP so that we can plan the future of our business.”
For now, Heinemann Australia is focused on survival.
“I’ll be honest, we have to regroup,” Goodman said. “We were very optimistic as retailers that something would come and we feel let down. We’ll continue to work on survival and keeping our team members employed, as much as possible given the absence of any kind of industry support package.”