Let’s dial down the coronavirus scaremongering
The coronavirus could not have struck at a worse time for Australian retailers still reeling from the impact of bushfires and floods, particularly in NSW and Victoria.
The coronavirus has shuttered restaurants and other independent businesses in popular Asian shopping and hospitality precincts and has reduced foot traffic in shopping centres.
The panic around the outbreak is testing already fragile consumer confidence, but it also looks set to disrupt supply chains in a double whammy for retailers.
It also hit at the worst time in China with millions of people in transit for the country’s New Year holidays.
According to the Australian government’s Health Department website, global travel has carried the virus to 60 countries but the death rate from coronavirus is less than 4 per cent of those infected and most of those deaths have been attributable to poor or late access to medical attention.
It is worth comparing the fewer than 3000 coronavirus deaths reported so far by the World Health Organisation with the more than 16,000 influenza deaths in the same period in the US alone, says the US Centers for Disease Control and Prevention.
The US alone has had three times the number of influenza infections compared with coronavirus in the same period.
The Department of Health site states that Australia has identified fewer than 30 cases of coronavirus, at least 15 of which have fully recovered. One person in Perth died earlier this week.
In comparison, 50,000 Australians suffer a stroke each year, says the Stroke Foundation.
The real danger of coronavirus is not the disease itself but the panic it has created, the rumours and speculation that are fanning fear and a disproportionate reaction notwithstanding the infection rate would be expected to rise.
Australia has certainly introduced stringent entry requirements on all international travellers, including quarantine periods for citizens returning from places that have reported coronavirus infections.
It also has the medical facilities to provide treatment for any people who have been infected and some pretty basic personal hygiene measures significantly reduce the chance of infection.
Yet the hysteria around the outbreak has savaged the sharemarket and the Australian dollar, which will increase the cost of goods sourced overseas. It has created yet another challenge for retailers as tourism numbers plummet, international students are blocked from entry to Australia and some consumers curb the time they spend in public settings.
Government budgets are being eroded and economic forecasts trashed by the financial impacts of the bushfires and floods over summer and the compounding shock of the coronavirus.
The global reaction to coronavirus, the crisis reporting of conventional media and inaccurate theories and rumours on social media are all further denting consumer and business confidence levels.
A mooted further interest rate cut by the Reserve Bank will do nothing to boost confidence and counter the negative impact of the coronavirus scare, falling job numbers and higher prices for many retail products, including food.
What is required to address falling consumer confidence is some rational political and medical messaging and reassurance.
Restoring business and investor confidence is arguably a much tougher proposition, with the looming prospect of supply chain disruption and higher costs for imported products, as well as lower demand for exports for as long as the coronavirus scare captures global headlines.
However, like government, retailers and other businesses need to play a part in building consumer and investor confidence and encouraging staff in stores to be positive and buoyant.
The first half of the 2020 financial year was relatively weak in terms of sales growth and earnings despite the fillip of the November Black Friday and Cyber Monday sales events.
For some retailers, including Bardot, Harris Scarfe, Colette, Jeanswest, Curious Planet and Ishka, dismal first-half trading has forced them into administration.
While most, if not all, of those retailers are expected to be rescued, albeit scaled down, the recovery for them and an upturn in the fortunes of other chains will require effective, confident and positive customer engagement strategies.
Most publicly listed retailers have warned investors that profitability for the full financial year will be influenced by the bushfire, flood and coronavirus events.
The warnings are prudent; but rather than accept an inevitable jolt to sales and earnings, retailers need to provide consumers with reassurance and relief from the doom and gloom and crisis mindset.
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