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Help Desk

This week we speak with Dan Meiklejohn, Country Manager for Advantage New Zealand, to understand how COVID-19 is impacting life and retail in the country.

Q1 - New Zealand has been widely recognized and applauded for how it managed through the COVID-19 pandemic. What were some of the proactive and more successful measures the government adopted, and what role did the FMCG and grocery industry play in helping the country navigate through the most challenging periods of the crisis?

New Zealand (like Australia) had things that really helped us early on. Some were natural – we are an island nation with a limited number of entry points, so the government’s early border restrictions (then ultimately closing to all but returning expats) stopped the mass importation of the virus from overseas. Therefore, when our strict lockdown came into effect we were able to drastically reduce the spread of the cases we had in the country. We also have a well-respected leader, who had already developed a high level of trust with the public after the way she handled the Christchurch mass shooting & the Whakaari/White Island eruption. She took a very clear leadership position when it came to the “people” side of things, but also presented a very small team of experts and she allowed them to lead in their individual areas of expertise – health, economy, policing, etc. New Zealanders generally like to stretch boundaries and rules, but in this case, 99.9% of the country acted quickly and decisively to work together to solve the problem.

In terms of the local FMCG industry, again our size and market concentration helped, but that is not to understate the incredible response of everyone involved. Most businesses redirected all their efforts into maintaining stock weight on shelf and servicing the incredible surge in demand. Whilst suppliers focused on supply, retailers worked on how to manage the shopping process to accommodate social distancing.

New Zealand restrictions were very severe; no fast food at all, no independent liquor stores, hardware, pet or non-essential retail. Online sales were only allowed for essential services (food, pharmacy and liquor) so supermarkets had to pick up the slack on all retail activity – feeding 5 million people with around 1,000 large and small stores.

This led to a flurry on innovation – screening was erected at all checkouts, electronic payment was mandatory, apps were developed so you could sit in your car and get a text when it was your turn to enter the store, etc.

Essentially everyone placed all effort into feeding the nation as safely as possible. Supermarkets temporarily increased the wages of all their workers by 10% for the duration of the lockdown.

Q2 - With lockdown measures beginning to relax, how is the industry preparing for the next phase?

The next phase sees more industries back to work and other retail now allowed to trade online-only, or at least have contactless trading for coffee/fast food, however, the hospitality sector is still closed. All suppliers will be looking at where the new normal of demand will sit. Foodservice will likely be the hardest hit in the long run. With New Zealand so heavily reliant on tourism and the feeling that borders can’t reopen until there is a vaccine, many restaurants and bars will close permanently, which will create further restructuring and downsizing.

Q3 - Which reactionary measures do suppliers and retailers in New Zealand feel might stick around for the longer term? Do organizations on the ground feel that this was a momentary blip in their ways of working, or something that could alter the industry for decades to come?

Range was already under growing pressure before the pandemic, and this will accelerate further. Online shopping will most likely keep a portion of its newly acquired customer base and we have just had the first opening of an online-only supermarket in Auckland, with more to follow. There will also be changes in the workspace, with more “Work from Home” and remote meetings taking place. Merchandising support, which one retail group was looking to bring in-house and charge suppliers for, may now be even more important as stores cannot manage demand peaks with their staff alone. From a consumer perspective, there will be more focus on home cooking given that there are fewer dining out options available and concern over the economic impact. There has also been a shift towards “Made in New Zealand” products over imports.