“Whilst it is encouraging to see the steady return of office workers to CBDs, occupation rates remain significantly lower than normal. Coupled with the absence of international visitors and lower domestic visitors within CBDs, the outlook remains devastating for these retailers – as it does for retailers reliant on global travel, with expectations around the return of international travel remaining in the distant future. Unfortunately, this group of retailers are a forgotten cohort, falling outside the existing government support schemes.
“The Covid threat remains alive as we’ve seen with the recent outbreak in Brisbane, which has spread to Northern NSW. Lockdowns and restrictions come at a tremendous cost to retail, and they are counting the cost of lost turnover during one of the busiest times of year with many holiday makers having to cancel their plans.
“Despite the setbacks, most retailers have been resilient through the Covid pandemic and we are hopeful of a solid second half with vaccinations continuing to rollout creating more certainty.
Richard Facioni, executive chairman, Alquemie Group (Surfstitch, Ginger & Smart, Lego certified stores)
“JobKeeper has been rolling off for the past few months, so the impact will be less pronounced than would otherwise have been the case. Mosaic Brands, for example, hasn’t received any JobKeeper subsidies since the December 2020 quarter.
I believe we’ve already seen a slight softening of consumer demand in those sectors more exposed to JobKeeper. I expect this to continue. But I think it will be more gradual than would have been the case with a sudden end to the program.
“Consumer sentiment will be something to keep an eye on, particularly in those sectors where the consumer may have been a significant beneficiary of JobKeeper. Foot traffic in centres still has not returned to historical levels and lockdowns continue to be a fact of life, at least for now. This means retailers need to be diligent in optimising their store networks and cost structures for the new world, whatever that looks like, noting it will differ from sector to sector. I think we should anticipate continued uncertainty and fickle consumer demand for some time.
“Supply chain is the other area we need to be mindful of. We continue to see supply chain disruptions, some Covid-related, some not. We need to factor in the potential for continued disruptions when building our timelines.
“To be honest, I think the government has done a great job when it comes to supporting the economy through the crisis. The best thing they could do now is accelerate the vaccine rollout. I feel we’re now lagging some of our peers in this regard (US and UK for example). Once the vaccine rollout program is in full swing, I expect consumer confidence will continue to improve, particularly in the older demographics.”
Richard Goodman, managing director, Heinemann Australia
“JobKeeper has no doubt played a significant part in assisting us in continuing to operate and we are thankful that our government has financially supported us, however with this [now] ending, retail recovery at international airports remains unknown.
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.”
Letting go of team members means [it will take] 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.
“We need to see an extension of JobKeeper or an equivalent industry package. We need a decision to be made ASAP so that we can plan the future of our business.”
Harley Dale, chief economist at CreditorWatch
“It’s important to note that the retail trade sector is remarkably diverse, made up of businesses of a variety of sizes who have all been affected differently by the pandemic and corresponding government stimuli. The retail sector as a whole has undoubtedly shrunk – you only need to walk through your local shopping centre to see this – and unfortunately, post-JobKeeper, we’re likely to see more businesses forced to shut shop.
“However, those businesses that have survived and can support themselves without cash-flow aids will be in an excellent position post-JobKeeper as cashed-up consumers are eager to spend their money. If we look online, e-commerce for goods has fared very well, as have food delivery services when consumers were reluctant to physically go shopping. CreditorWatch’s latest Business Risk Review found that the retail sector has in fact experienced some of the lowest delayed payment times in Australia – a positive sign that significant parts of the sector are starting to operate closer to business as usual.
“Overall then, we’re seeing a real dichotomy. CreditorWatch data has shown that we don’t expect the retail sector to ‘fall off a cliff’ in terms of the number of insolvencies we initially feared at the back end of last year might occur. A considerable increase in external administrations within the sector post-JobKeeper will unfortunately arise because not all businesses will find it commercially viable to continue trading.”
Georgie Chapman, partner, HR Legal
“With the end of the JobKeeper scheme, the economic support provided by the Federal Government is no longer available to businesses, potentially causing financial difficulties for employers who were relying on the payments as an economic safety net.
As a result, a challenge for employers in a precarious financial situation is whether they can continue to run their businesses with current staff arrangements or whether organisational changes will be necessary.
“A further challenge is the end of the “JobKeeper directions” which provided certain flexibilities for employers. For eligible businesses… these included allowing employers to reduce hours, stand down employees, perform alternative duties and/or work at an alternative location. In summary, these flexibilities permitted employers to re-organise their workforces in ways to mitigate some of the negative impacts of the pandemic. They allowed employers to change work arrangements without having to seek their employees’ agreement to vary key terms and conditions of employment. This was particularly advantageous for employers because the JobKeeper directions applied even where inconsistent with modern awards, enterprise agreements or employment contracts.
Employers should be aware that employees on JobKeeper directions will need to revert back to their substantive terms and conditions of the employment contracts and/or applicable industrial instrument. If employers wish to make ongoing variations to duties, hours or work locations, then they will need to seek the employee’s consent (unlike stand downs which are at the employer’s initiative). Where an employer wishes to vary an employee’s terms post-JobKeeper, and the employee agrees, we would advise that this agreement is confirmed in writing by issuing a new employment contract or contract variation (whether the variation is temporary or permanent).
“Employers previously utilising the stand down provisions under JobKeeper, and wish to continue this, will now have to meet the statutory definition of a stand down contained in the Fair Work Act 2009. This means that employers will need to show that employees cannot usefully be employed because of a stoppage of work for which the employer cannot reasonably be held responsible. Whether an employer meets this definition will depend on the individual circumstances, but the ongoing impact of the pandemic may fall within this definition in certain industries and sectors which are still impacted (such as travel), although it should be noted that in many respects retail has been able to recover from the pandemic with the re-opening of businesses.”