Ghost towns, closed shops and online shopping boom: How retail has changed since the pandemic began

The streets were almost apocalyptic, as retailers flipped their open signs to closed on March 25, 2020.

And the sector hasn’t been the same since.

Leaving work at 7.30pm on the day of the first Covid-19 lockdown, Heart of the City chief executive Viv Beck​ recalls Auckland’s Queen St was eerily deserted.

“Almost apocalyptic,” she says.

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Auckland’s retailers, who thrive on central business workers and tourists, were already in the midst of a spending downturn when Covid-19 struck.

“You could literally see the life draining out of the city centre as events were cancelled and people went off to work at home,” Beck says.

Since that day two years ago, the way New Zealanders shop has changed completely, she says.

Thousands of retailers have closed their doors permanently, while others have moved online, opted for click and collect or downgraded their brick and mortar stores.

Auckland’s department store Smith & Caughey was forced to close multiple times throughout the last two years as the region battled through numerous lockdowns.

Managing director Edward Caughey​ says the Queen St store has pulled through some challenging conditions.

But the biggest challenge has been rebalancing the business to cater for the “explosive growth” it has been experiencing with its online store.

“The growth has been outstanding,” he says.

Retail NZ chief executive Greg Harford​ says there was real despair among retailers when the first lockdown was announced. Multiple lockdowns later, online spending is keeping many retailers afloat.

“The pandemic has driven massive change in retail,” Harford says.

We are shopping a lot more online, with the volume of online sales doubling over the past two years, it’s now locked into consumer behaviour, he says.

While customers are expected to return to the shops, “we have seen a systemic shift towards more online shopping. This will mean retailers need to rationalise their store networks to take account of the way customers are now shopping”, he says.

KPMG partner Ian Williamson​, says the increase in online shopping has created higher experience expectations among shoppers.

It has been driven by the necessity of moving online, and consumers have become more familiar with navigating online shopping, Williamson says.

Online credit card spending figures show more older and rural consumers who were effectively forced into online shopping by necessity, now actively choose to purchase goods online, he says.

It’s a trend that looks set to continue.

“With the growing familiarity for consumers with the online purchasing environment, expectations for e-commerce are high, which means retailers are continuing to invest in this area, often at the expense of new brick and mortar stores,” Williamson​ says.

“They know online is here to stay.”

The growth of online shopping caused a parcel boom for New Zealand Post late last year, with more than 20 million parcels sent during the Christmas season.

NZ Post’s Ecommerce Spotlight report found on online shopping was up $1.35 billion last year, driven by a permanent change in shopping patterns.

Online spending reached $7.67b in 2021, 52 per cent higher than before the pandemic.

Overall retail online and in-store grew spending was up $2b in 2021.

“With growth of $1.35b, online accounted for two-thirds of that growth, highlighting the rapidly changing way Kiwis are shopping and reinforcing the key role online shopping played in keeping our economy going in 2021,” the report says.

Mitre 10 chief marketing officer Jules Lloyd-Jones​ says the way customers choose to shop at the home improvement chain has rapidly evolved since the arrival of Covid.

“We’ve seen significant and sustained growth in online shopping, and we’ve been continually developing and improving our digital offering.”

It has increased the product range available on its website and developed services such as an online paint colour picker, allowing customers to choose from thousands of colours.

As “two shots for summer” played out at the end of the year, and in-store shoppers returned for the silly season, retailers thought they might have been in the clear.

But the Omicron outbreak dashed those hopes and put even more pressure on the already struggling sector.

Government director at Dot Loves Data, Justin Lester​, says despite Eftpos NZ transactions in Auckland increasing 11 per cent in March, compared with the same month last year, most other regions are struggling.

Spending in Wellington is down 15 per cent, Tauranga is down 10 per cent, Hamilton 9 per cent, Christchurch 8 per cent and Queenstown is 5 per cent lower.

“New Zealanders are maintaining social distancing, working from home and avoiding confined public spaces,” Lester says.

This has a significant impact on CBD businesses, who are experiencing the largest decline in spending during the pandemic outside of lockdowns, he says.

New Plymouth home and lifestyle shop Arthaus has put its entire stock on sale to generate cash flow, owner Lisa England​ says.

“We don’t normally sale at all, in fact this is only the third we have had in 17 years.”

When the store reopened after the initial lockdown, sales were crazy because people wanted to support local and redecorating the home became the substitute for overseas travel.

But since the Covid traffic light system, and the move to the red light setting was announced, the city has been deserted, England says.

“We are doing our best to continue trading as normal, we haven’t reduced our store hours yet. We are hoping to just ride it out till it’s over, and we can all return to normal, whatever that may be?”