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'End of the road': Retail, hospitality sectors sound warning on Omicron

·Finance reporter
·4-min read
A empty shopping cart sits in front of early empty shelves of meat at a supermarket in Washington, Tuesday, Jan. 4, 2022. (AP Photo/Andrew Harnik)
Retail and hospitality businesses say they are struggling more with Omicron than they were with lockdowns. (Source: AP)

The Omicron wave could spell the end for small hospitality and retail businesses if the Federal Government does not provide financial support, industry experts have warned.

The alarm bells come as consumer confidence nosedives amid widespread COVID-19 cases across the country.

ANZ consumer confidence figures fell by nearly 3 per cent in January, to their lowest level since September 2020, and the lowest level for the month of January since 1992.

Statistics also show spending has decreased to levels matching those in the elongated Delta-related lockdowns of last year.

'Set us alight and dropped the hose'

The rapid spread of Omicron is leaving consumers reluctant to leave home, while increased numbers of positive cases has led to booking cancellations and staffing issues.

Tanya Hanouch, co-owner of popular Bentleigh wine bar Wolfe & Molone, said the latest evolution of the COVID-19 pandemic in Australia is “very different” to the lockdowns of 2020 and 2021.

Bentleigh wine bar Wolfe & Molone (Source: Supplied)
Bentleigh wine bar Wolfe & Molone. (Source: Supplied)

“The lockdowns were tough for everyone in hospitality, but we had government funding,” she said.

“It is very different this time around, and it’s hitting closer to home for people. More are getting sick and people are more wary about going out.

“We’re struggling purely because there’s no government support this time around, despite the fact that it’s more challenging than ever for hospitality businesses.

“It almost feels like the government has set us alight and then dropped the hose.”

The impact Omicron has had on the retail and hospitality sectors is stark, especially when considering the latest business turnover numbers from the Australian Bureau of Statistics.

Those figures, covering November and released in mid-January, showed increases in 12 of the 13 sectors covered, with accommodation and food services seeing a 15.9% month-on-month increase.

Fast forward to January however, and the picture looks very different.

Retail and hospo beset by positive cases

“Trading conditions in November were very different to what retailers are facing currently,” Paul Zahra, CEO of the Australian Retailers Association, told Yahoo Finance.

“We’re expecting the December numbers to hold up quite well, but we’re bracing for the worst when the January numbers are released.

“We’ve entered unchartered territory in the pandemic with Omicron decimating workforces and impacting supply chains.

A sign attached to a store shelf alerts shoppers of that an item is in limited supply, Thursday, Jan. 20, 2022, at a grocery store in Surfside, Fla. (AP Photo/Wilfredo Lee)
A common sight in shops across the country as Omicron bites. (Source: AP)

“Around 70% of our members say they currently have staff in isolation, a third have limited trading hours at some locations and around one in five have had to close some stores altogether due to staff shortages.

“We have not seen the pandemic impact the sector on this scale. For the first time retailers are having to navigate these challenges with reduced levels of government support compared to what was in place over the past two years.”

Rent relief welcome but not enough

Both Zahra and Hanouch welcomed the news that the commercial rent relief schemes had been extended in both Victoria and New South Wales, however Hanouch, who has not paid herself since Jobkeeper was active, said more needed to be done.

“Any kind of funding would be greatly appreciated,” she said. “The rent relief extension is appreciated but there are few parameters around it which is making it difficult for us to negotiate with our landlords, because we don’t know what the government is putting forward.”

“Rent is a significant pain point for business, and leasing codes of conduct have now expired in most jurisdictions, leaving small businesses vulnerable to significant cash flow challenges in the first quarter of this year,” Zahra said.

“It’s clear that the impacts of Omicron will be ongoing and that additional targeted support packages will be needed from governments to support small businesses through this unprecedented challenge."

Hanouch said it was already too late for many business.

"For some, Omicron will be the final nail in the coffin. We’re going to see small retail and hospitality businesses either fold or slowly die out."

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