Paul Zahra, CEO of the Australian Retailers Association
"Rebuilding from Crisis: The Economic & Social Case for
Household & Business Certainty"
12.30pm, Wednesday 9 September 2020
Paul Zahra: Thank you Sabra. I would also like to acknowledge the traditional custodians of the land on which we meet, the Ngunnawal people.
When I started my retail career on the shop floor of Target three decades ago, the definition of a crisis was when you ran out of a customer's favorite shade of lipstick, or when overseas stock didn't arrive in time for Christmas.
If you had told my sixteen year old self that in the year 2020, retail life as we knew it would grind to a complete halt for weeks – stretching into months in some parts of Australia – it would have seemed like a scene from a science fiction horror movie.
Yet here we are, living that reality. And despite our best hopes and efforts, it's not looking like a return to 'normal' anytime soon.
. . .
Not everyone makes a career out of retail like I did, but many Australians have worked in retail at some point. The retail sector is the largest employer of young people in the world. Like many Australians, many of you in this room had your first job in retail or hospitality.
From hairdressing to hardware, beauty services to bakeries, from food to fashion to furniture, the retail industry touches each and everyone of us. It's part of our essential living, part of our social fabric, part of our community.
And, in the next 12 months, unfortunately we will all know people who will lose their jobs in retail as we confront Australia's worst ever recession.
The Pandemic has highlighted the impact of the retail sector
The pandemic has given all Australians an understanding of the power of retail and its impact on our economic fortunes.
The $325 billion retail sector is our largest private sector employer – employing an estimated 1.2 million Australians. That's one in ten Australian workers.
Beyond the macro numbers – this year has shown us just how personal that relationship is between Australians and retailers.
Retail workers – on the frontlines of the Australian economy
From the supermarket worker to the pharmacist – from our local gift shop operator to our favourite shoe store – these essential workers have bravely served us and kept us fed, clothed and entertained through lockdowns. They were the first faces we saw, welcoming us out the other side of lockdowns. They were our first return to normal life. Unfortunately, in Victoria in the coming weeks, they will be amongst the first signs of economic collapse.
Retail performance is a true bellwether for the economy.
A retail failure is highly visible – we can see the impact of a store closure on street level. We walk past the empty shop with its "for lease" sign every day. A retail failure is emotional. We miss our conversations with the shop staff – they often know more about our lives than some of our friends. We worry if they will be ok, if their family will be ok. We question
what it means for the broader community – if that business which was such a staple in our world can fail, what does that mean for other businesses?
When retail fails, it doesn't just hit the national bottom line - it knocks our confidence; our consumer confidence and our mental health.
Everything is interlinked. Confidence and certainty are intrinsically linked to spending. Spending is intrinsically linked to jobs.
These jobs and job losses affect young people- many who earn a living whilst studying to secure their future. They affect women – who find the part-time and casual opportunities align with their family needs. They affect older workers and those who are left out of other opportunities.
And they affect hundreds of thousands of other Australians in the retail supply chain.
Every dollar given in social security is spent. Every dollar spent in retail, gives someone a job – from sales staff to manufacturer to the truck driver delivering the goods. One person's spending is another person's income.
We need this spending to continue – household spending is the biggest part of our economy- it accounts for around 56 per cent of all spending. (Source)
Covid has put a spotlight on retail for governments
We can clearly see that. You can't have an economic recovery without a retail recovery.
Close to every dollar a minimum wage earner spends ends up in the retail economy. We saw glimpses of this when during the GFC in 2008-2009, Prime Minister Kevin Rudd's economic stimulus dollars went straight into the retail economy.
Unfortunately, we are far from a retail recovery.
Retailers have been surviving - not thriving.
Whilst we have seen a reasonable retail performance in recent months since widespread lockdowns, this result has been underpinned by support measures including superannuation withdrawals and JobKeeper and JobSeeker payments which have been stimulating much of the retail spend around the country in recent months. (ABS data).
Of course in hard-hit areas like Victoria and CBD locations due to not having tourists and people working from home, retail is not tracking well at all. We are starting to see the emergence of a two-tiered or two-speed economy – those recovering and those continuing to suffer.
It is very concerning to imagine what will happen when the effect of these support measures wears off.
Recent research projected that the scheduled end of the JobSeeker payment after December will take the equivalent of $8.5 billion per year from the retail sector.
The equivalent of 130,000 Australian retail jobs are also immediately on the line if we return the rate of the JobSeeker payment to its old base rate.**
Over 2.2 million Australians on working-age payments - including 1.6 million on JobSeeker and Youth Allowance (other) - are currently receiving the Coronavirus supplement according to the Department of Social Services.**
Social security recipients spend an estimated 58 per cent of their payments on retail goods or services. **
Based on these spending habits, out-of-work Australians will spend $326.9 million** per fortnight from their Coronavirus supplement from September at supermarkets, convenience stores, essential merchandise stores and other local small businesses.
Again, these numbers are powerful, but they don't paint the full picture. This is about to become even more personal – given the unemployment rate is forecasted to increase significantly, possibly at levels never experienced in this country before, every Australian will be directly or indirectly affected - with a brother, a sister, a mother, a father, a son, a daughter, a friend or a former colleague likely to be on JobSeeker.
We need to spend our way out of this recession.
They say never waste a crisis. So to put this new awareness of the impact of retail to good use and to have a sustainable recovery, we need to normalise some of the spending realities.
We are pleased to see an extension of JobKeeper.
What we can agree on today is we'd like to see permanent support for JobSeeker or a similar scheme.
It doesn't make sense to return people who do not have work, to the poverty line. We recognise the positive impact of these support measures on individuals and the economy.
Beyond JobSeeker, we are keen to see the bringing forward personal income tax cuts and improving childcare options and resourcing, we do need to make it easier for both women and men to have the flexibility they need to care for children.
. . .
If you had told my sixteen year old self, standing on the shop floor of the Target store that one day I would be standing in Canberra talking about the need to raise the level of the unemployment benefit to help Australians and to ultimately help retailers, I would have thought "that's a nice and noble conversation to have."
But I would not have understood the true power and impact of that deep connection between our economic health, our retail health and the mental health of someone who is out of work.
Through this crisis we do understand and can see that link very clearly. And we cannot turn back from this understanding.
We must use this knowledge as power and use that power to help Australians to have the certainty to spend our way out of this crisis.
It's not only humane, it's good for everyone to do this. And the sooner we provide this certainty, the sooner we can advance our retail recovery.
