The COVID blues are once again ravaging Australian retailers after half the country entered a lockdown and forced major brands to shutter stores.
Residents in Sydney, Perth, Brisbane and Darwin are now being forced to stay home to combat a worsening virus outbreak, in what economists are predicting will cost the economy $2.5 billion over just two weeks.
And in a costly case of COVID deja vu, outdoor retail chain Kathmandu warned it will take a $13 million hit from the latest lockdowns on Monday, with 123 stores across Australia forced to close over the past month.
CEO Michael Daly said the company will also miss its sales targets.
Kathmandu closed 40 stores in NSW on Monday after authorities unveiled a 14-day lockdown, just days after 62 stores in Victoria emerged from a two-lockdown earlier in June.
Another 26 stores in Western Australia have closed for four days under that state’s shorter snap lockdown announced on Monday night.
Other major retailers – including Rebel owner Super Retail Group and Smiggle owner Premier Investments – saw their stock prices tumble on Tuesday as investors reacted to the latest round of forced closures.
Australia falling behind
Luckily for Kathmandu, and others with stores overseas, nations like the US and UK are starting to thrive after successful vaccine rollouts.
In a remarkable shift in fortunes, Mr Daly suggested that Australia, which months ago was a bastion of economic strength amid a growing global outbreak, is now battling lockdowns while overseas stores speed ahead.
“Trading conditions in the northern hemisphere for both Rip Curl and Oboz are particularly strong across our online, retail and wholesale channels,” he said.
Meanwhile, Australia – now in the midst of its worst COVID-19 outbreak since the height of the pandemic last year – has fully vaccinated less than 5 per cent of residents in a slow rollout that has been widely criticised.
Independent economist Saul Eslake said that while Australia’s recovery from the pandemic has led many other nations, the cost of the sluggish vaccine rollout is mounting and condemning the country to more lockdowns.
“Increasingly, our strategy is lock ’em in, lock ’em out, lock ’em down, and if all else fails, lock ’em up – or at least threaten to,” he told TND.
“That strategy is going to be increasingly costly for our economic performance relative to the rest of the world.”
AMP chief economist Shane Oliver called it a “never-ending pandemic” in a note on Tuesday, estimating the cost of snap lockdowns in Sydney, Perth and Queensland at $2.5 billion.
“[Australia] still has to be cautious in preventing coronavirus [from] taking hold, and so has little choice but to continue down the snap lockdown/global border closure path,” Dr Oliver said.
“Better to wait until herd immunity is reached and we can learn to live with a level of coronavirus circulating in the community rather than dropping our guard too early and having to learn to die from it.”
The economic cost of extra lockdowns associated with Australia’s delay in vaccinating residents was estimated at up to $4.1 billion in April by the Labor-aligned think tank The McKell Institute.
That analysis assumed Australia might experience an extra 34 days in lockdown as a result of the delayed vaccine rollout.
Since that estimate was released, Australia has been plunged into more than 40 days of lockdown across various capital cities, much of which will happen in the next two weeks.
Assumptions in the most recent federal budget also only anticipated the country would experience one three-to-four-day lockdown each month.
Victoria and NSW alone will now spend 28 days in lockdown combined across June and July.
McKell Institute CEO Michael Buckland is now estimating the economic costs will be much worse than his initial analysis indicated.
“We were hopeful that we would be looking at our rollout similar to the UK,” he told The New Daily.
“Unfortunately it’s worse … because the vaccine delay hasn’t been remedied, and unless we speed up we’re likely to have even more lockdowns.”
But Mr Eslake said estimates based on the impact of lockdowns last year were likely to exaggerate the effects of lockdowns this year, because “people have learned to cope” with COVID restrictions.
He said consumers find other ways to buy goods, such as online shopping, and noted that recent evidence shows consumption picks up once restrictions ease.