As you will be aware, the Government announced what Level 3 will look like yesterday. The official line remains that no decision to shift to level 3 has been made yet, and no decision will be made until Monday. However, a few slips by the PM and a few Ministers strongly indicate that the decision has already been made (barring an increase in community transmission). The PM said yesterday, that Level 3 will be in blocks of 2 weeks and that she would give an indication of how long the Country could be expected to remain in Level 3 at the time the level reduces. Therefore, we will find out whether it is 2 or 4 weeks will come Monday. Treasury scenarios favour 4 weeks as giving the best economic outcome, so we think that is the most likely scenario.
The shift to Level 3 is not dramatic, but it will give a significant proportion of businesses an opportunity to resume trading in some form and to connect with customers and get some cash in for the first time in weeks. We expect there will be a short burst of spending in the first few days or weeks after the status change, and this will get much-needed cash into the economy. After that initial burst, consumers will likely spend less than normal. For this reason, businesses will want to be in a position to cash in on the initial surge.
What industries will be able to restart
Level 3 is heavily restricted but allows businesses to trade if they can operate in a safe way that limits personal interactions. This includes:
- Food and Takeaways – through contactless methods such as drive through, delivery and click and collect.
- Retail – through contactless methods such as online delivery and click and collect.
- Building and road maintenance
- Forestry and other primary industries that could not trade at Alert Level 4.
- Other trades – plumbers and electricians etc will be able to visit peoples homes but must keep a distance from their customers.
- Real estate – there will not be open homes, but some activity can recommence.
As discussed later, strict health and safety measures will be required in all cases.
What industries will not be able to restart
Unfortunately, it is the worst affected industries that will be very limited in what they can do. These include:
- On-premise hospitality
- Tourism and recreation sectors
- Brick and mortar retail (with no or limited online presence).
We expect further Government support will be announced to these affected sectors as they are large employers.
Food and retail
If your business has a limited online footprint, then it is probably too late to fully scale up your online presence before Level 3 arrives. However, if nothing else, you should get in the market selling at least some of the things that you are most famous for.
Channels for selling your products online could include:
- Existing e-commerce platforms such as TradeMe;
- Creating your own online store through the likes of Shopify;
- Marketing through social media. Have friends and family share posts about the things you are selling.
Now more than ever, people are going to want to support local business, so it is important that you give them that opportunity. Your loyal customers will know you are suffering, and they will want to support you.
Health and safety
Before businesses rush out and resume operations, it is important that the appropriate health and safety measures and policies are put in place.
At an absolute minimum Level 3 requires:
- Social distancing to be maintained
- All contacts/interactions to be traceable
- Good hygiene practices (hand sanitiser is widely available again now).
- Deep clean procedures
To give you a flavour of the health and safety requirements, here is a Government guide for the construction industry: https://www.sitesafe.org.nz/globalassets/guides-and-resources/new-zealand-covid-19-construction-protocols.pdf