The Australian Industry Group estimates the snap five-day lockdown cost Victoria’s economy more than $2.3 billion in lost or postponed household spending. Coming as it did across Valentine’s Day and Chinese New Year, horror stories were plentiful.
Florists called for compensation from the Government, having lost $36 million in sales on what is their biggest trading day of the year, not to mention losses over events such as weddings. The hospitality industry estimates revenue losses to be about $100 million, with almost $30 million in fresh food and produce was dumped.
The Victorian Government has announced grants of $2000 will be available to eligible small businesses, including sole traders, for those hit by the lockdown, but there is little else that businesses can do to claw back what was lost.
There may be more pain to come
Snap lockdowns have now occurred in several states and retailers need to proceed as if future lockdowns are inevitable, and that means now is the time to lockdown-proof the business.
Retailers should heed warnings that tailwinds fuelled by the COVID-19 pandemic are set to lighten as the absence of tourists and population growth takes a toll.
The second quarter of the calendar year looms as flat and hard. Retailers have winter stock on order but it will not arrive until April, May and June, whereas it should be getting sold in those months, which creates a lag to cover those costs.
Speed is of the essence
During the lengthy shutdown that Victoria went through last year, retailers had time to develop contingency plans but in 2021, speed is now essential.
Whether it is a pivot straight to online or facilitating click and collect, business owners must have a game plan that can be quickly turned on and off again, because there is no time to prepare when everything suddenly snaps shut.
Despite the surge in online sales, independent retailers haven’t secured the same market share as big players in the last 12 months. Small businesses can’t necessarily compete on price and scale, but they have agility and that means owners can focus on creating a seamless online experience, personalising communications and keeping their customer base engaged.
Trust is everything when it comes to digital communications and sales – a customer who has a poor initial online experience with a small operator will not often be back for a second purchase.
Diversify your messaging
Don’t wait until there’s a new issue or problem to shore up communication channels. Make sure interactions are clear and share positive news, which helps to build trust with your online community.
Relying on just one way of getting the message out is fraught with danger, as any outlet that has been caught up in the Facebook news lockout will attest, so ensure there are multiple effective communication channels within your control, such as email newsletters or push messages.
Communicate with your financiers and landlords as well. Know exactly when business funders are going to turn back on principal and interest, what any back rents are going to be and when they are going to be paid, and managing the debtor’s books to make sure people are not going out of business under your feet.
Small businesses need to be nimble and have a structured plan to move quickly if another lockdown occurs. Employing lockdown-proofing measures gives retailers the best chance of staying competitive and ensuring any losses are minimal.
Mark Harrison, Partner and Executive Director, Pitcher Partners
