Tag Archives: shopping
The suburbs are the future of post-COVID retail
Gary Mortimer, Queensland University of Technology; Louise Grimmer, University of Tasmania, and Paul J. Maginn, University of Western Australia
The COVID-19 pandemic delivered a body blow to CBD retailers, but it’s just the latest of their challenges in recent years. They were already under pressure from cautious consumer spending, intense competition from online retailing and the growth of suburban “mega-centres”.
Now, declining commuter foot traffic and an increase in people working from home present new challenges for CBD retailers. Lockdowns, changing work practices and the need for social distancing have left some of Australia’s largest city centres at times resembling ghost towns.
Read more:
How COVID all but killed the Australian CBD
Even as restrictions lift and CBDs reopen, it will not be business as normal.
Stores will shrink
Retailers that depend heavily on discretionary spending, for items such as clothing, footwear and accessories, have been hit particularly hard.
The latest Australian Bureau of Statistics figures show clothing, footwear and personal accessory retailing fell 10.5% in August 2020, in seasonally adjusted terms. Department stores were down 8.9%.
Retail Trade, Australia, ABS, CC BY
Interestingly, despite an average decline in spending of -0.2% between 2015 and 2020, research by McKinsey in 2019 found clothing and footwear retailers increased their selling space by almost 2%.
Clothing, footwear and department store retailers are now expected to “right-size” their selling space. McKinsey predicts a floor-space reduction of more than 10% between now and 2024.
Read more:
Retail won’t snap back. 3 reasons why COVID has changed the way we shop, perhaps forever
CBD-based department stores have fared worse than those in the suburbs. The Myer Annual Report 2020, for example, highlights the impact of COVID restrictions on CBD store sales. Despite reopening all stores (except Melbourne) by May 27, CBD store sales fell 33%, whereas suburban store sales contracted by only 9%, in the final seven weeks of the financial year. Myer reports: “Low foot traffic in CBDs expected to continue for the foreseeable future.”
Myer annual report 2020
Online shopping is surging
As COVID shut down cities, Australian shoppers moved online in increasing numbers. The NAB Online Sales Index estimates Australian consumers spent around $39.2 billion in the 12 months to August 2020. Online shopping now accounts for 11.5% of total retail sales in Australia.
Research from Australia Post shows over 8.1 million households shopped online between March and August this year —
900,000 of them for the first time. In cities around Australia, foot traffic has become web traffic.
We can clearly see the impacts of this on physical retailers. A number of major retail chains have closed, including Toys ‘R’ Us, Roger David, Esprit, Ed Harry, TopShop and GAP over the past few years.
CBD workers shift away from commuting
As an increasing share of people work from home and fewer commute to city centres, the long-term future of CBD retailing looks bleak because of the fall in demand.
This shift in behaviour is likely to be substantial, as transport expert David Hensher recently observed:
The evidence reinforces the fact that as we move through and beyond the COVID-19 period, we can expect commuting activity to decline by an average of 25-30% as both employers and employees see value in a work-from-home plan.
The ongoing health and economic crisis caused by the COVID-19 pandemic and the required physical distancing measures will force many firms to introduce telework (working from home) on a large scale.
In Australia, it has been estimated 39% of all jobs in Australia — 41%of full-time and almost 35% of part-time – can be done from home.
Read more:
Fancy an e-change? How people are escaping city congestion and living costs by working remotely
CBD retailing relies on workers and visitors who use public transport. An August 2020 Transurban report found 84% of daily train users (77% of bus users) in Melbourne said they had reduced their use. Many said they did not expect to return to daily use even after the pandemic. Similar numbers were reported in Sydney and Brisbane.
Data: Urban Mobility Trends from COVID-19, Transurban
COVID restrictions and declining commuter traffic have also had big impacts on the food and beverage market. According to IBISWorld, Australian restaurant revenue has fallen by 25%, from almost A$20 billion in 2018-19 to just A$15 billion in 2019-20. Cafe owners are equally feeling the impact, with fewer commuters grabbing their morning coffee and fewer coffee meetings happening around town.
Back to the future
With both commercial and residential rents remaining relatively stable outside CBD zones, and more people choosing to work from home, we can expect to see a growth in “localism”.
Shopping mall owners have invested heavily in refurbishing and increasing the floor space of their centres to provide retail, hospitality, entertainment, leisure and recreation activities under one roof. Somewhat ironically, these refurbished malls have even appropriated design elements of traditional high streets.
With many more people working from home during the pandemic there has been something of a retail inversion with more people shopping locally. There are clear signs of a resurgence in local shopping villages and high street retailing. There even appears to be a corner store revival of sorts.
Read more:
More than milk and bread: corner store revival can rebuild neighbourhood ties
CBD-based retail is at a crossroads, especially in Melbourne and Sydney. Despite restrictions being lifted, the data indicate CDBs may never return to the “bustling metropolises” they once were.
The precarious state of the national economy, government plans to reduce subsidy payments, more people working from home, shopping locally and online, all point to a bumpy road ahead for CBD retailers.
Major questions are being raised about the future character and function of the CBD and, ultimately, about the structure of Australian cities more broadly.
Gary Mortimer, Professor of Marketing and Consumer Behaviour, Queensland University of Technology; Louise Grimmer, Senior Lecturer in Marketing, University of Tasmania, and Paul J. Maginn, Associate Professor of Urban/Regional Planning, University of Western Australia
This article is republished from The Conversation under a Creative Commons license. Read the original article.
Can Australian businesses force customers to wear a mask? Here’s what the law says
Loren Elliott/AAP
Rick Sarre, University of South Australia and Juliette McIntyre, University of South Australia
Many Victorians are now being asked to wear a mask in public if they can’t socially distance.
It is possible this practice may be encouraged more widely across Australia, amid a push from health professionals to increase mask-wearing.
Read more:
Victorians, and anyone else at risk, should now be wearing face masks. Here’s how to make one
People will of course still want to visit private spaces, including offices, GP clinics and churches. They will want to go shopping and visit cafes.
So, can businesses refuse entry to customers who are not wearing a mask? Similarly, can they refuse entry to anyone not sanitising their hands?
What are our rights and obligations when it comes to mask wearing?
Business owners can set the rules
Australian law, quite simply, says that private landowners or occupiers can take reasonable steps to protect themselves, their employees and people on their property.
So it would be legal for businesses – including cafes and supermarkets – to make it a condition of entry that customers wear a mask and sanitise their hands.
Loren Elliott/ AAP
It makes little difference whether the business is a GP clinic rather than, say, a greengrocer, in establishing their right to exclude patrons. However, in practical terms, people should realise the increased potential for catching/transmitting COVID-19 in a healthcare facility makes it even more important for the business owner to exclude those failing to wear a mask.
Entry conditions are nothing new
Entry rules and safety requirements are concepts we are already very familiar with in Australia.
We know and accept that nightclubs and private bars can enforce dress codes without fear of running afoul of the law. Indeed, you cannot board a plane or enter big public arenas without a bag check.
Schools have been instructing students’ families to accept “no hat, no play” for years due to the dangers of children being sunburnt.
Read more:
Which face mask should I wear?
Moreover, the law mandates seatbelts in cars and helmets for cyclists. These infringements on personal liberty are seen as acceptable – in both practice and law – because they protect both individuals and community safety.
It’s also about occupational health and safety
When it comes to businesses making customers wear a mask, there are important occupational health and safety considerations as well. The International Covenant on Economic, Social and Cultural Rights notes employees have a right to “safe and healthy working conditions”.
Scott Barbour/ AAP
The United Nation’s 2011 Protect Respect and Remedy Framework also emphasises the need for businesses to take adequate preventive measures to ensure the health and safety of workers.
Following a major 2002 report to the federal government on negligence law reform, civil liability amendments were enacted in all jurisdictions across Australia.
South Australia’s Civil Liability Act provides a useful example of the scope of the reforms. It says when examining “standard of care”, a court must take into account, among other matters,
the measures (if any) taken [by the building occupier] to eliminate, reduce or warn against the danger; and the extent (if at all) to which it would have been reasonable and practicable for the occupier to take measures to eliminate, reduce or warn against the danger.
We don’t need ‘mask rage’ here
In the United States – where the political and COVID-19 situations are admittedly quite different from Australia’s – there is a heated debate about mask wearing. This has involved multiple cases of “mask rage”, featuring full-on scuffles in shops over people’s refusal to wear a mask.
Read more:
Mask resistance during a pandemic isn’t new – in 1918 many Americans were ‘slackers’
This ongoing mask conflict recently gave rise to a sign, reportedly put up by a Portland bar, that was then shared widely on social media. It captures the essence of the legal position here in Australia, too.
We can also use common sense
It is also important to note that that businesses, in setting their rules, cannot act in a discriminatory way. The law protects us against a range of discriminatory behaviours. The potential for, say, disability or religious discrimination might allow a person to legitimately refuse to wear a mask.
In that event, the shop would need to make alternative arrangements for that customer.
Ultimately, however, when it comes to taking protective action, as a community we need to rely as much on commonsense and common courtesies as anything else.
Rick Sarre, Adjunct Professor of Law and Criminal Justice, University of South Australia and Juliette McIntyre, Lecturer in Law, University of South Australia
This article is republished from The Conversation under a Creative Commons license. Read the original article.
Sure, let’s bring production onshore, but it might not ensure supplies
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Naoise McDonagh, University of Adelaide
The pandemic has changed the way we think about supply chains, in particular the chains that feed our need for food, medical supplies, and defence equipment.
It has led Prime Minister Scott Morrison to frame access to supplies in terms of economic sovereignty.
Andrew Liveris, now an advisor to Morrison, and a former Dow Chemical Chief and advisor to both the Obama and Trump administrations, is pushing for re-shoring of critical supply chains.
“Australia drank the free-trade juice and decided that off-shoring was okay,” he is quoted as saying. “Well, that era is gone.”
But ensuring supplies can withstand shocks needn’t mean bringing production onshore. It might make it harder.
Stockpiling isn’t that useful
Firms usually talk about managing supply risk in terms of resilience or robustness.
Robustness is the ability to continue supplying during a disruption (for a while we didn’t have this with toilet paper).
Resilience is the ability to get supplies back to normal in an acceptable time frame (which we had with toilet paper).
For critical supplies, robustness is the most important, but it hard to achieve for entire categories such as “medical equipment”. There, stockpiling is of limited use.
The United States has a stockpile of oil, enough to fill half of its car tanks. Canada has a vault of maple syrup, called a “strategic reserve” – about 80,000 barrels worth.
But when it comes to stockpiling “medical equipment” we might put a lot of effort into stockpiling ventilators, for example, only to find that the next emergency requires something different, or a different type of ventilator.
And it’s hard to stockpile fresh food.
We are exposed at choke points
Face masks and food illustrate the risks.
Half of global facemask production is concentrated in China. China’s factories closed during its lockdown at the time global demand simultaneously soared, resulting in a major shortages.
Australia is one of the most food-secure nations on earth, exporting far more than it needs, but a 2012 department of agriculture report found that many of the inputs, including pesticides and packaging, especially long-life packaging, were made overseas.
Read more:
Don’t panic: Australia has truly excellent food security
We got a taste of that vunerability in March 2020. After drought-breaking rains across the country generated a spike in demand for these essential farm inputs, supply tightened due to coronavirus-related restrictions in China.
The crunch led Australian farm supply firm Nufarm to publically warn that Australia was dangerously dependent upon China.
Disasters can happen here too
The best way to achieve supply chain robustness is to build supply chains involving more than one supplier, located in more than one national territory.
While worth considering as part of the solution, re-shoring won’t achieve this.
Japan’s 2011 Japan earthquake illustrates the point. Japan is self-sufficient in auto parts, but the earthquake hit the region that supplies them.
Read more:
The US has bought most of the world’s remdesivir. Here’s what it means for the rest of us
If we do re-shore, it will make sense to continue to use at least one international supplier to ensure diversification. Self sufficiency isn’t the same as robustness.
Building robustness will require a federally-directed supply chain risk diversification strategy.
Self-sufficiency isn’t robustness
Given the extent of our trade with China, the best approach might be China-Plus-One. It could mean one stream of the supply of a good coming through China and another coming through, for example, Vietnam.
It’s an approach adopted by Japan.
Re-shoring can play a role, but we are going to need a top-down assessment of the risks facing supplies of critical goods, and quite possibly the imposition of robustness requirements on firms distributing them.
Those firms can be offered a diversification tax credit.
A robustness strategy would be more likely to be pro-trade rather than anti-trade, but we won’t know until we do the work. It’d be best to start before the next crisis.
Naoise McDonagh, Lecturer in Political Economy, Institute for International Trade, University of Adelaide
This article is republished from The Conversation under a Creative Commons license. Read the original article.
Don’t panic (again): here’s why Melbourne’s supermarket shortages will quickly pass
Flavio Romero Macau, Edith Cowan University
You’re nervous, I get it.
Panic buying is back, not as strong as in March and more localised in Melbourne. Once again shop shelves have been emptied of pasta, toilet paper and other household items.
When will things get back to normal? Soon, more than likely in a matter of days, rather than weeks.
What is different now
Last time most of Australia was involved. Taken by surprise, supermarkets struggled with shoppers across the nation going into “hoard mode” simultaneously.
Normally supermarket supply chains run like well-oiled machines with highly predictable demand. Products move slowly and continuously from factories to distribution centres to stores. Supply chains are “skinny”, with stores ensuring they have just enough stock to meet that demand, particularly for low-margin products like toilet paper that take up a lot of shelf space.
A spike in demand can thus quickly empty shelves. It can prompt other shoppers to also start stockpiling, due to fear of missing out, making the problem worse.
Read more:
Stocking up to prepare for a crisis isn’t ‘panic buying’. It’s actually a pretty rational choice
Responding to this situation in March took weeks, as supermarkets adjusted their orders and manufacturers ramped up production to supply more products. The supermarket chains used every trick in the book to balance supply and demand – including imposing limits on the quantity of products shoppers could buy at any one time.
What is happening
This time suppliers are more prepared. Their lean supply chains have built some fat. Inventory has not been at a minimum. Limits on the amount customers can buy have been quickly reintroduced.
So why are shelves empty at all if this time businesses are more responsive?
Well, one thing has not changed: there’s still a lag in supply chains responding to any sudden change in demand.
With toilet paper, for example, orders are generally fulfilled in about ten days. Last time it took about three weeks for more paper to make to it shops.
But, given the information of a spike in demand in Victoria made its way from shops and distributors to manufacturers almost instantly, things should happen faster this time.
Read more:
Disagreeability, neuroticism and stress: what drives panic buying during the COVID-19 pandemic
Retailers have already moved to answer the call by rerouting deliveries to increase supply where it is needed the most. The only thing stopping supply returning to normal is the speed of transportation and restocking.
Also, the spike in demand is heavily localised in Melbourne. While there have been reports of panic buying and stockpiling in other states, it’s nowhere near the level of a few months ago.
So shortages in Victoria will not be as prolonged as last time. Redirecting inventories will be a lot simpler.
Think of it this way. Panic buying during March was like a big detour in the supply-chain highway given the whole country was involved. Now it is more like a car with a flat tyre reducing traffic speed locally. It’s not less dramatic for the people affected, but much simpler from a supply-chain perspective.
Read more:
A toilet paper run is like a bank run. The economic fixes are about the same
The new normal
So don’t panic. There’s less reason to join in the panic buying (or stockpiling, if you think of it as a rational response to lockdown) this time. We’re likely to experience these disruptions so long as COVID-19 outbreaks continue. The “new normal” is like a faulty switch. Regions will be on and off the spot until the pandemic is over.
But as long as the entire nation does not move backwards all at the same time, supply chains from one state will quickly support the one experiencing difficulties.
There’s really no reason for you to add to the problem.
Flavio Romero Macau, Senior Lecturer in Supply Chain Management and Global Logistics, Edith Cowan University
This article is republished from The Conversation under a Creative Commons license. Read the original article.
Disagreeability, neuroticism and stress: what drives panic buying during the COVID-19 pandemic
Peter O’Connor, Queensland University of Technology; Jeromy Anglim, Deakin University, and Luke Smillie, University of Melbourne
Panic buying has returned to Australia in the wake of its second-biggest city experiencing a spike in COVID-19. The Victorian government has reimposed stay-at-home restrictions on 36 of Melbourne’s 321 suburbs in response.
Once again supermarket stores are being emptied of toilet paper and other consumables.
Read more:
Grattan on Friday: Scott Morrison undeterred on COVID re-opening despite rise in toilet paper index
But this panic buying isn’t just in affected areas. It’s not even limited to Victoria. Empty supermarket shelves have been reported in Canberra, Mittagong in the New South Wales southern highlands, and Bathurst in the NSW central tablelands.
As a preventative measure Coles and Woolworths have reintroduced nationwide limits on the amount of toilet paper shoppers can buy. Coles is also limiting packets of pasta, rice and long-life milk nationally, while Woolworths has so far done so only for Victoria.
Prime Minister Scott Morrison has called the panic buying “ridiculous”, and previously dubbed it “unAustralian”.
But are admonishments helpful in stopping panic buying?
That depends on what motivates people to panic buy. The COVID-19 pandemic has given us the chance to ask.
What motivates panic buying?
We’ve surveyed more than 600 Australians, first in April then again in June, about their stockpiling behaviour, attitudes and feelings.
Our results show about 17% of shoppers admitted to panic buying in April. About 6% were continuing to stockpile two months later, joined by an equal number who did not buy in April and feared missing out again.
Panic buyers and stockpilers were more likely to be younger and under financial and personal stress. A number of personality traits were also significant predictors. Those less agreeable, more anxious and less able to cope with uncertainty were more likely to panic buy.
These findings suggest panic buyers are likely to feel a lack of control in their lives and worry more about COVID-19. Stocking up on items gives them a sense of security in one part of their lives. They are likely to be less cooperative and considerate of others.
Studying panic buying
We recruited our 600 participants via consumer-survey company Pure Profile, which ensured our sample was representative of the Australian population.
We asked if they had “stockpiled”, and how much, in response to COVID-19, as well as questions about their income, education attainment, attitudes and personality.
Participants indicated their agreement with more than 100 statements such as:
- I am someone who is emotionally stable, not easily upset
- I spend too much time following COVID-19 related news coverage
- Obtaining food and basic household items has been a major source of stress.
Read more:
Why are people stockpiling toilet paper? We asked four experts
Agreeableness
The strongest predictor of “early” panic buying was low “agreeableness”.
Agreeableness describes how motivated people are to cooperate with and consider the feelings of others. It is typically expressed as polite and compassionate behaviour. We measured this trait by asking respondents to agree or disagree with statements such as “I am someone who is sometimes rude to people” and “I am someone who can be cold and uncaring”.
Measures of agreeableness predict a range of considerate and helpful behaviours such as treating others fairly and helping others in need.
In our results, 23% of low scorers on agreeableness reported panic buying compared with 14% of high scorers.
Read more:
The science of being ‘nice’: how politeness is different from compassion
Neuroticism
The second strongest predictor was high “neuroticism”.
Neuroticism describes a person’s experience of negative emotions such as worry, anxiety and uncertainty. Those with this trait tend to agree with statements such as “I often feel sad” or “I am temperamental and get emotional easily”.
High scorers experience negative emotions more intensely and more often. Our data shows that 22% of high scorers on neuroticism reported panic buying compared to 12% who scored low.
Our results also suggest these individuals are driven to stockpile to limit their need to go to the supermarket as much as fear of store supplies running out.
Financial stress
Stress also appears to be a significant factor. Panic buyers in our survey were significantly more likely to have been stood down or had their hours reduced due to COVID-19.
Those 32 and younger were about 40% more likely to have panic bought than those older. This is likely due to the economic impacts hitting younger workers hardest, as well as young families generally facing more financial and domestic strain.
Panic buyers also reported more time worrying about COVID-19, and more conflict in their household as a result of the pandemic.
Fear of missing out
The fear of missing out was the main predictor of respondents stockpiling in June. More than half these “late” stockpilers did not do so in April. They were far more likely to agree with the statement “Difficulties in obtaining basic household has been a major source of stress” than the April panic buyers.
So while panic buying is indeed more common in “selfish” people, it might also serve as a coping mechanism. People who experience higher levels of instability and uncertainty – due to personality disposition and/or their life circumstances have been disrupted – are most likely to panic buy and stockpile.
Read more:
A toilet paper run is like a bank run. The economic fixes are about the same
Stockpiling gives such individuals some sense of control and reduces one source of potential stress in their lives – the possible difficulty to obtain essential food and household products.
With more outbreaks of panic buying predicted over the next 12 months as new COVID-19 hotspots emerge, we need more strategies than condemnation to address that behaviour.
Peter O’Connor, Professor, Business and Management, Queensland University of Technology; Jeromy Anglim, Lecturer in Research Methods in Psychology, Deakin University, and Luke Smillie, Associate Professor in Personality Psychology, University of Melbourne
This article is republished from The Conversation under a Creative Commons license. Read the original article.
COVID-19 has changed the future of retail: there’s plenty more automation in store
Shutterstock
Gary Mortimer, Queensland University of Technology; Jana Bowden, Macquarie University; Jason Pallant, Swinburne University of Technology; Louise Grimmer, University of Tasmania, and Martin Grimmer, University of Tasmania
Australian supermarket giant Woolworths has announced its single biggest investment in logistics infrastructure, spending A$780 million to replace up to 1,300 workers with robots.
It plans to build one semi-automated and one fully automated distribution centre in south-west Sydney. About 650 jobs will be created at the new centres, to open in 2024. Three existing centres (two in Sydney, one in Melbourne) will close as a result.
Woolworths’ chief supply chain officer, Paul Graham, emphasised the safety benefits of automation:
Cutting-edge automation will build tailored pallets for specific aisles in individual stores – helping us improve on-shelf product availability with faster restocking, reducing congestion in stores, and enabling a safer work environment for our teams with less manual handling.
In these COVID-conscious times that’s the obvious spin.
But it’s true this is a response to the changes being wrought on the retail sector by COVID-19.
The principal change is a matter of pace. COVID-19 has turbocharged the shift to online shopping. Even as social-distancing rules ease, this trend will consolidate. Many bricks-and-mortar shops are in trouble, particularly those in shopping centres.
Retail will also be shaped by how COVID-19 has changed our shopping behaviour, with thrift and value being important.
Shopping online is the new norm
In April, 5.2 million Australians shopped online, according to Australia Post’s 2020 eCommerce Industry Report. The Australian Bureau of Statistics estimates those sales were worth A$2.7 billion, 11.1% of all physical retail sales, compared with 7.1% in March 2019.
This sharp hike in demand exposed weaknesses in retailers’ online capabilities. For example, crushing online demand meant both Woolworths and major rival Coles temporarily suspended their online shopping services.
More automated fulfilment centres are part of meeting these online demands. Of course, such investments were already on the radar.
In March 2019, Coles announced an exclusive deal to use the “end-to-end online grocery shopping solution” developed by Ocado, a British online supermarket chain that has no stores, only warehouses. Its technology spans the online shopping experience, automated fulfilment and home delivery.
Willy Barton/Shutterstock
The Coles plan included two new “highly automated” customer fulfilment centres in Melbourne and Sydney, to be ready in 2023. Coles also announced plans for two new automated distribution centres in Queensland and NSW, costing A$700 million, in October 2018.
Woolworths itself has already opened the Melbourne South Regional Distribution Centre, whose automated features are hyped in the following promotional video.
So these latest moves are part of a trend, albeit one unexpectedly accelerated by COVID-19. And once consumers try new channels, studies show, they are likely to stick with them.
The future is dark
At the other end of the supply chain, the shift to online shopping has created demand for “dark stores” – essentially, stores without customers. These smaller, decentralised facilities, located in suburbs rather than industrial parks, are designed to pick and dispatch online orders quickly.
Woolworths opened its first dark store in Sydney in 2014. Coles opened its first in Melbourne in 2016. Existing stores are also being repurposed as dark stores. In April 2020, Australia’s Kmart temporarily converted three stores to use as fulfilment centres.
Such moves may become permanent, as shoppers demand faster delivery times and physical store assets become less viable as “traditional” retail businesses.
Existing stores are also being adapted to respond to customer demands for faster, more efficient online shopping. In January 2020, Woolworths began building its first “eStore” – an automated facility adjoining its supermarket in Carrum Downs, Melbourne.
Fewer, smaller stores
As online shopping increasingly provides greater revenue streams for retailers, more physical store closures are also on the cards.
In May, Kmart’s owner, Wesfarmers, announced it would shut 75 of its Target stores (and convert the rest to Kmart stores). Also looking to downsize are Australian department store icons Myer and David Jones, which have accelerated their plans to reduce floor space 20% by 2025.
Read more:
Don’t blame COVID-19: Target’s decline is part of a deeper trend
Footwear giant Accent Group – which owns more than a dozen shoe brands and has more than 500 stores in Australia and New Zealand – is planning to close 28 stores and focus more on online sales.
As online revenues grow, expect more “right-sizing” and closures.
Repurposing shopping centres
All these closures will add to the woes of shopping centres.
Though crowds reportedly surged back to centres when “lockdown” restrictions were eased, growing awareness that the pandemic is not over and social distancing protocols continue to create consumer anxiety.
Read more:
Brick-bait: three tricks up retailers’ sleeves to lure you back to physical shops
Until people feel safe shopping, dining and gathering in crowded public places, consumer aversion will remain.
In response to these COVID-conscious times, shopping centres will endeavour to enhance those aspects of the shopping experience, such as sensory elements and entertainment, which the online shopping experience can’t provide.
The retail mix will change: fewer fashion and general merchandise shops, and more services such as medical centres, offices and childcare centres.
Opportunities for smaller retailers
One bright spot may be for local and independent shops.
Smaller retailers can often adapt faster than larger ones. Smaller community pharmacies, for example, implemented social distancing and hygiene measures more easily than larger retailers, due mainly to their smaller size and having less traffic.
Read more:
Coronavirus shopping tips to keep you safe at the supermarket
There are opportunities to leverage shoppers’ desire to support local shopkeepers, producers and growers. Locally made goods and services are also less likely to have long supply chains that will impede overseas deliveries while COVID-19 is uncontained.
But they’ll still need to sort out their online shopping experience.
Gary Mortimer, Professor of Marketing and Consumer Behaviour, Queensland University of Technology; Jana Bowden, Associate Professor of Marketing and Consumer Behaviour, Macquarie University; Jason Pallant, Lecturer of Marketing, Swinburne University of Technology; Louise Grimmer, Senior Lecturer in Marketing, University of Tasmania, and Martin Grimmer, Professor of Marketing, University of Tasmania
This article is republished from The Conversation under a Creative Commons license. Read the original article.
Retail won’t snap back. 3 reasons why COVID has changed the way we shop, perhaps forever
It’s wrong to expect a “snap-back” at shopping centres, food courts, cinemas and other places where people used to gather to spend money.
We’ve identified three reasons why spending in physical stores on goods like clothes is likely to remain much lower than it was for a long time.
1. Fear, much of it age-based
First, even when governments relax restrictions, lots of people will still be worried and will go out less. Unless there are zero cases for several weeks in a state or city, many people will remain reluctant to go out.
This is why we have previously argued that there is a big dividend in eliminating COVID-19 in the style of New Zealand, the Northern Territory, and South Australia, rather than bumping along with “suppression” – and several new locally-acquired cases a day – as Victoria is still doing.
This reluctance to go out and spend, irrespective of government restrictions, could be seen in Australia before government restrictions were imposed, as shown on the “Consumers and mobility” tab of the Grattan Econ Tracker.
Read more:
New Zealand hits zero active coronavirus cases. Here are 5 measures to keep it that way
The effects of fear shouldn’t be underestimated.
Spending in Sweden has fallen almost as much as in Denmark, even when Denmark was in lockdown and Sweden had minimal restrictions. Swedes are afraid to go out, particularly if they are old.
Spending by people aged 70+ has fallen further in Sweden than in Denmark, and 60-69 year-olds have cut their spending by about the same amount in both countries.
This isn’t surprising. COVID-19 is much more deadly for older people.
Age-based fear is a challenge for retailers because older households now spend significantly more than younger households. 25 years ago it was the other way around.
2. Time to form new habits
Second, we are likely to keep spending on different things, and using different channels, even after restrictions are lifted.
Habits tend to form when behaviour changes consistently. They strengthen over time, and are particularly sticky once behaviour has been consistent for a period of months – and we’ve been living with lockdown for that long in Australia.
Once formed, the new habits can persist unless there is another shock.
Australians have become used to doing more of their purchasing online. They have become used to spending more on living comfortably at home, and less on clothes for the office and to go out.
After the shutdown, people are likely to continue to work from home more often.
The habits of shopping remotely, and spending more on home furnishings and less on clothes, are likely to continue, and they would be likely to continue even if COVID-19 vanished tomorrow.
3. Global recession
Third, irrespective of COVID-19 regulations and behaviours, we are heading into an “old-fashioned”, globally synchronised, deep recession.
For the moment, JobKeeper, the temporarily-boosted JobSeeker payment, and a recent bounceback, have resulted in spending on credit and debit cards a bit more than this time last year.
But unemployment jumped to 7.1% on Thursday. That official rate understates how bad things are.
In May an extra 227,700 Australians lost their jobs (on top of 607,400 in April).
But only 85,000 of them were counted as unemployed. When and if the bulk of those people look for work, the unemployment rate will climb further.
Employed Australians, total
ABS 6202.0
After JobKeeper ends in September (or is phased out as a result of the government’s review) many of the three million people on it will also become counted as unemployed.
Australians who have lost their jobs are likely to spend less than they did before.
After each of the previous two recessions it took years for employment to recover.
Spending need not recover after COVID
These three factors – fear, new habits, and recession – are present in countries and regions that seem to be well clear of coronavirus.
Much of China has been free of most government restrictions for months. Manufacturing and infrastructure spending has largely returned to pre-COVID levels.
But consumer activity is still below pre-COVID levels, and it is inching up only slowly.
Read more:
The economy in 7 graphs. How a tightening of wallets pushed Australia into recession
Australia might well see an “opening party” on the day each particular COVID-19 restriction is lifted.
But after that, the best guess is that consumer spending will remain very subdued and refocused for a long time.
For those in the hardest-hit sectors and regions – particularly arts and recreation, hospitality, and clothing – the pain will continue long after the restrictions are lifted.
John Daley, Chief Executive Officer, Grattan Institute
This article is republished from The Conversation under a Creative Commons license. Read the original article.
Watch yourself: the self-surveillance strategy to keep supermarket shoppers honest
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Gary Mortimer, Queensland University of Technology and Paula Dootson, Queensland University of Technology
Retailers have tried many overt tactics to limit theft, such as signs that display images of CCTV cameras, threats to prosecute offenders, bag checks, checkout weighing plates and electronic security gates.
These tactics are extremely costly and have failed to stamp out retail theft.
Now supermarkets are trying a different tactic, that’s part overt surveillance but also encourages “self-reflection” on any impulse to exploit loopholes in the bagging and payment systems.
In late May Australian supermarket giant Woolworths confirmed it is trialling self-service checkout terminals with built-in cameras. They display your image as you scan your items. Rival Coles started trying the technology in April 2019.
The idea is that watching yourself scan your own groceries will reduce the temptation to steal. It is supported by research that shows the effectiveness of cues that cause us to self-focus and self-regulate.
Retail theft continues to grow
Since 1990, when the Australian Insitute of Criminology published extensive research on retail crime and its prevention, it has been widely accepted crime-related losses account for about 1% of all retail revenue. Estimates of customer theft were woolier.
In August 2019 the Australia and New Zealand Retail Crime Survey came up with a specific number. It reported total crime-related retail losses amounted to 0.92% of revenue. Customer crime was 58% of that – or 0.53% of total revenue.
Though funded by retail technology company Checkpoint Systems, the survey sample is robust – almost a quarter of the retail industry in Australia and New Zealand. Also, the lead researcher, Emmeline Taylor, is a criminologist in the Department of Sociology at City, University of London respected for her expertise in retail crime.
Costs of loss prevention
Writing about her research in 2018, Taylor tells the story of a major Australian supermarket discovering it was selling more carrots than it had in stock.
Unfortunately this wasn’t a sudden switch to healthy eating or a desire to increase vitamin C intake, it was an early sign of a new type of shoplifter. Otherwise honest shoppers were using the self-service checkout to transact more expensive items – typically avocados – and put them through as carrots.
Shutterstock
She termed these self-service checkout thieves “SWIPERS” – seemingly well-
intentioned patrons engaging in routine shoplifting. As the Australia and New Zealand Retail Crime Survey states:
Their behaviour and motivations (that are often interlinked) fall into four main groups: the accidental thieves, the switchers of labels, those compensating themselves, and those that steal because they claim to have become frustrated with the process of self-checkout (e.g. triggering alerts or purchasing age-restricted items that require assistance from an employee).
Read more:
The economics of self-service checkouts
Prevention techniques
The traditional approach to loss prevention involves attendants and security guards, specialised display fixtures, reinforced packaging, training, in-store signage, display alarms and more cameras.
More of these can prove counter-productive, as highlighted by the Australian Institute of Criminology’s analysis of local crime prevention strategies in 2014. It found, for example, that introducing surveillance systems or security guards made shop staff less likely to approach suspicious shoppers.
Getting away with it
The research by Taylor and others into the motivators of shoplifting points to the potential of another way to reinforce honest behaviour.
While some forms of stealing might be considered irrational – such as kleptomania – shoplifters often rationalise their thefts.
Read more:
How shoplifters justify theft at supermarket self-service checkouts
How much they steal comes down to their own “deviance threshold” – the point at which they can no longer justify their behaviour alongside a self-perception as a good person. This helps explains the greater frequency of shoplifting lower value items. It’s easier to justify a small “discount” on your bill.
If it’s just a small theft, also, the chances of getting caught are smaller. If caught, the chance of getting away – passing it off as an honest mistake, perhaps – is higher. This semi-conscious calculation is known as the “denial of punishment probability”.
You are being watched
An obvious strategy for retailers is to make shoppers more aware they are being watched.
Research has demonstrated “eyes” images do this more effectively than images of security cameras or written reminders such as “you are being observed”. This is due to eyes triggering instincts connected to our evolutionary capacity for gaze detection – sensitivity to being watched.
Read more:
Super-recognisers accurately pick out a face in a crowd – but can this skill be taught?
But eyes signs also have their limitations.
Newcastle University researchers Max Ernest-Jonesa, Daniel Nettleb and Melissa Bateson did an experiment in a campus cafeteria and found that posters featuring eye images resulted in less litter being left on tables than images of flowers, but less so when the café was busier.
Max Ernest-Jones, Daniel Nettle, Melissa Bateson, CC BY-NC-ND
The more people around the more we relax. Those “eyes” can’t be watching everyone.
Think of yourself
A more effective tactic might be appealing to another honed evolutionary instinct: a “think of yourself” focus.
University of East Anglia researcher Rose Melaeady and colleagues demonstrated this with experiments using signs to encourage drivers to turn off their engines at a busy rail crossing with a two-minute average wait.
After an experiment just using an “watching eyes” image (with no discernible effect) they tried two signs.
One with set of human eyes and the words: “When barriers are down, switch off your engine”
The other with just the words: “Think of yourself: When barriers are down, switch off your engine.”
Rose Meleady et al, Environment and Behavior, February 10 2017., CC BY-NC-ND
With no sign, 20% of drivers switched off their engines. With the watching eyes sign, 30% switched off. With the “think of yourself” sign, 51% did so.
Self-surveillance
So the supermarkets’ self-surveillance strategy combines two tactics. First, a “traditional” external motivation to do the right thing – amplifying the spotlight effect with an overt reminder we are being watched. Second, it is also intended to evoke self-reflection and self-regulation.
These steps will likely add to concerns about personal privacy, though Woolworths and Coles say no recordings are being made.
Read more:
From fare evasion to illegal downloads: the cost of defiance
Even if they were, though, the embrace of cashless transactions – with just 27% of all payments now made with cash – suggests most customers aren’t overtly concerned about how much others know about their shopping habits.
Gary Mortimer, Professor of Marketing and Consumer Behaviour, Queensland University of Technology and Paula Dootson, Senior Lecturer, Queensland University of Technology
This article is republished from The Conversation under a Creative Commons license. Read the original article.
What COVID-19 means for the people making your clothes
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Sarah Kaine, University of Technology Sydney; Alice Payne, Queensland University of Technology, and Justine Coneybeer, Queensland University of Technology
Workers everywhere are feeling the impact of COVID-19 and the restrictions necessitated by COVID-19.
In Australia, retail and hospitality workers have been particularly hard hit. In other countries, it’s manufacturing workers, hit by disruptions to value and supply chains.
A value chain is the process by which businesses start with raw materials and add value to them through manufacturing and other processes to create a finished product.
A supply chain is the steps taken to get a product to a consumer.
Most of the time we don’t think about them at all.
Cotton is complex
Our research project with the Cotton Research Development Corporation is investigating strategies for improving labour conditions in the value chain for Australian cotton.
This is the chain in which our cotton is spun into yarn, woven or knitted into fabric, and turned into garments and other items which are sold to consumers.
When we began our project in mid-2019 the world was a very different place.
The changes brought by COVID-19 have had a significant impact on those working throughout the chain – particularly in garment production, but with flow on effects to other tiers.
Read more:
The real economic victims of coronavirus are those we can’t see
The tiers in the diagram are numbered backwards.
The first is Tier 4, where Australian cotton is grown and harvested. The next is Tier 3 where it is turned into yarn, usually overseas.
Tier 2 is the production of fabric, Tier 1 is the production of garments and other products, and Tier 0 is retailing and selling to retailers.
Alice Payne
Tier 0 (brands and retailers) has been hit by delays in shipments due to factory closures at Tiers 1 and 2.
However this has been matched by a decline in demand as social distancing and lock-down arrangements discourage or prevent consumers from shopping in person.
In Australia retailers such as Country Road, Cotton On and RM William temporarily closed, taking short-term retail job losses to 50,000 or more.
Globally, many multinationals have closed their doors.
Shocks along the chain…
Nike is expecting sales to drop by US$3.5 billion. While seemingly immune from some of the social distancing provisions, online retail is also likely to take a hit due to a drop in demand.
Tier 1 (garment manufacturing) has been hit by falling demand as retailers cancel orders or ask for delays in payment. It has also faced disruptions in the supply of fabric, especially from China.
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Fabric producers in Tier 2 and cotton spinners in Tier 3 have had to contend with a decreased supply of raw materials and demands to retool to produce medical equipment.
For cotton growers in Tier 4, the fall in demand has pushed prices down from US 70 cents at the start of the year to US 50 cents, the lowest price in a decade, before a partial recovery to US 58 cents.
…with human costs
Reports of losses of tens of thousands of jobs in Myanmar and Cambodia paint a bleak picture.
In Bangladesh estimates have 1.92 million workers at risk of losing their jobs as factories receive notice of US$2.58 billion worth of export orders cancelled or on-hold.
Making things worse, many workers in Tiers 1-3 were receiving less than a living wage defined as the minimum needed to provide adequate shelter, food and necessities. This has made it hard for them to plan or save for emergencies.
Many are migrant workers without funds to return home.
Even the workers who manage to hang on to their jobs aren’t in the clear. Programs set up to improve their working conditions have been disrupted.
Read more:
Three years on from Rana Plaza disaster and little improvement in transparency or worker conditions
The Accord on Fire and Building Safety in Bangladesh is a legally-binding agreement between brands and unions set up in the wake of the collapse of the the Rana Plaza factory in 2013 which killed 1,133 people and critically injuring thousands more.
Inspections under the program have been suspended, as have audits due to the closure of borders.
The problems are cumulative – delays in orders due to interruptions in supplies will need to be addressed when factories scale back up, creating demands from buyers that might result in pressure for workers to work unpaid and involuntary overtime, or even worse, subcontract to the informal market where there is a high risk of human rights violations.
Shoots of hope
Amid the havoc are some shoots of hope.
Companies along the value chain have been asked to produce and supply medical equipment such as surgical gowns, face masks and materials and elastics.
Dozens of brands and retailers have donated funds and activated their logistics networks to support the effort.
As orders slowly start returning, cotton and textile associations have joined forces in calling for greater collaboration throughout the value chain. Governments have announced aid packages for their workers, and the European Union has provided an emergency fund to support the most vulnerable garment workers in Myanmar.
Longer term, the supply risks highlighted by the disruption might cause companies along the value chain to diversify their suppliers and even produce locally.
Read more:
It would cost you 20 cents more per T-shirt to pay an Indian worker a living wage
The crisis has demonstrated forcefully the importance for manufacturers and retailers to be agile. Yet this can best be done when workers have been well trained and have access to the best technology and equipment.
For now, we watch and see. Cotton is as good an indicator as any other of the brittleness of supply chains and the ways in which what we produce and consume affects the livelihoods of those further down the chain.
In the short-term, a best-case scenario would see a revaluing of garment work as “essential” in order to produce protective/medical equipment that we need in a way that benefits the people who help make them.
Sarah Kaine, Associate Professor UTS Centre for Business and Social Innovation, University of Technology Sydney; Alice Payne, Associate Professor in Fashion, Queensland University of Technology, Queensland University of Technology, and Justine Coneybeer, Research Assistant – Supply Chain, Queensland University of Technology
This article is republished from The Conversation under a Creative Commons license. Read the original article.
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