he global retail sector has been hard hit by the COVID-19 pandemic. Retailers across APAC have had to adapt to the new normal by implementing short- and long-term measures to keep their businesses and employees afloat.
In many locations, retailers have had no choice but to close their stores due to government-imposed restrictions and reduced consumer spending. While businesses in other sectors pivoted to a work-from-home model, there were limited opportunities for retail employees (particularly those working in physical retail outlets) to do so. As a result, retailers in many jurisdictions stood down their employees without pay for an indefinite period of time, or took other cost-cutting measures, such as reducing working hours and pay in an attempt to preserve their workforce and to avoid making any redundancies.
In Australia, the employment tribunal, the Fair Work Commission, implemented measures to mitigate the adverse effects on employees in the retail industry by introducing “Schedule X” to the Retail Industry Award 2010, the industrial instrument which governs the minimum terms and conditions of employment for employees in the majority of the retail industry. Schedule X enables employees to take two weeks of unpaid pandemic leave where they are unable to work as a result of receiving a direction to self-isolate, and allows employees to take twice as much annual leave at half pay (with employer consent). In addition, the Australian government introduced the JobKeeper Scheme, a wage subsidy scheme to help employers maintain employment relationships. Hong Kong and other jurisdictions have introduced similar subsidies and reliefs in an effort to prevent widescale redundancies across the sector. However, as the long-term effects of the pandemic show little sign of abating, it is becoming increasingly difficult for widescale redundancies to be avoided.
Retailers are therefore having to consider alternative ways to evolve and survive in the current economic climate where demands for some goods may fluctuate and where in-store shopping may not be feasible or desirable to consumers. In many jurisdictions, retailers have witnessed panic buying of essential goods, frequently leading to shortages and supply issues in relation to certain items. However, in China, which has been one of the first countries to emerge from lockdown, “revenge shopping” saw large spikes in spending in the luxury goods sector. Retailers and malls in other locations are trying to encourage similar returns to consumer spending through promotions, discounts and government-financed voucher schemes.
Retailers are also focusing on a longer-term move towards online selling and exploring other alternatives to in-person store sales. eMarketer projects, for example, that Chinese online retail sales will rise by 16% in 2020, while total retail revenues contract 4%. Retailers will increasingly focus on e-shopping platforms and experiences to meet consumer preferences for how they are willing to shop in the new normal world of retail.