Kathmandu and Adairs have joined Accent Group in gradually reopening physical stores across Australia after weeks of trading online only.
Kathmandu recently reopened most of its stores in New South Wales and Queensland on a trial basis, and expects the majority of Kathmandu and Rip Curl stores in Australia to be open by the end of this week. Adairs said it will reopen stores throughout May and June, with an initial focus on its larger format stores.
Both retailers said they are implementing new safety protocols, such as limiting the number of customers in-store, providing hand sanitiser and other protective items and only accepting contactless payments, to ensure staff and customer safety going forward.
“Our staged store openings reflect our ‘safety first’ approach as we welcome back our team and customers into stores,” Mark Ronan, Adairs CEO and MD, said in a statement released to the ASX on Monday.
“There is still a long way to go, however the actions and contributions made to date put us in a strong position to navigate this changing environment.”
The reopenings point to a turning of the tide since late March, when dozens of major retail chains announced mass store closures after Australians were told to stay home except for “essential” reasons as part of the Government’s effort to stop the spread of coronavirus.
Since then, the number of new coronavirus cases has dropped significantly, and some states have started to ease restrictions.
NSW residents are now allowed to visit other households in groups of up to two adults and their dependent children, and Queensland residents are free to leave their home for recreation, including non-essential shopping, as long as they don’t travel more than 50km.
Consumer spending and foot traffic are also beginning to show signs of recovery. Total credit and debit card spending for the two weeks to May 1, 2020, was down 10 per cent from the same period last year, according to CBA data. That’s an improvement from the previous analysis, which showed a 20 per cent year-on-year drop in spending for the two weeks to mid-April.
“Our analysis offers a glimmer of hope that we may be past the lowest point in terms of people spending less,” said Gareth Aird, CBA’s head of Australian economics.
“Although people are continuing to spend less [than the same period last year], the rate of decline is slowing.”
Foot traffic in shopping centres in the week commencing April 20, 2020, was down just 0.7 per cent on the previous week, though still sharply down (85 per cent) from the same period last year.
These are positive signs for multichannel retailers like Adairs and Kathmandu, which have taken a significant sales hit from the store closures, despite seeing increased transactions online.
Adairs Australia’s total sales for the five weeks ending May 3 were down 37 per cent year on year, despite seeing a 221 per cent increase in online sales in the period. The homewares retailer temporarily closed its stores from March 29.
Kathmandu also saw a rise in its e-commerce business in April, with group online sales 2.5 to 3 times higher than last year. The biggest increase was in Australia, Kathmandu’s largest market, where it temporarily closed stores on March 27.
The outdoor retailer confirmed the store closures have had a “material adverse impact” on its FY20 earnings.
But even as store reopenings gain steam, retailers remain cautious about their recovery.
“In the medium term, consumer demand is expected to be subdued overall, and international travel reduced as a result of the ongoing economic and social impacts of COVID-19,” Xavier Simonet, Group CEO of Kathmandu, said in a statement released to the ASX on Tuesday.
“However, there is a clear opportunity opportunity to answer the needs of our brands’ core consumers as they engage in active pursuits locally, on the beach, in the mountains and the outdoors.
“In this context, we will maintain a strategy focused on brand, product and customer, while continuing to diversify the business and accelerate digital transformation.”