As a business owner in Melbourne’s CBD, Rohan Hehir can’t afford to be anything other than optimistic, even though there have been times over the past year where that has been exceedingly difficult.
Customers are starting to trickle back to Rohan’s hole-in-the-wall coffee shop in The Causeway after a pretty grim 2020.
“Business was almost non-existent for us, we had the skeleton retail staff who were doing click and collect in their shops and that was about it,” he said.
Rohan and his wife kept their café open during the lockdown, even as shop after shop in the surrounding streets closed — most temporarily, many for good.
“Yeah, it’s very sad,” Rohan said.
A worker at another café a few doors down was working hard to entice the few people passing through the laneway to stop in for a coffee.
“It’s dead. It’s really depressing,” he said.
“We’re taking about $50 a day. This morning we’ve taken $20.”
Melbourne may have emerged from lockdown and started down the path towards normality, but it’s going to be a long and painful process for many businesses in the city’s CBD.
In one stretch of Swanston Street, leading up to Bourke Street Mall, close to a third of shopfronts are vacant.
Some businesses in the CBD are surrounded on either side by empty spaces, vacated by retailers who’ve either relocated or gone out of business entirely.
It’s an issue occupying a lot of Melbourne Lord Mayor Sally Capp’s time and energy.
A survey by the City of Melbourne in January showed 10 per cent of the CBD’s shops had closed permanently as a direct result of the pandemic, and a further 10 per cent had closed temporarily and not yet reopened.
There are some major challenges on the horizon that could make the situation very difficult to reverse.
JobKeeper’s ‘moment of truth’ for businesses
According to figures released this week by the Treasurer, Josh Frydenberg, there are more people in Victoria accessing JobKeeper than any other state, and the rate of people moving off the scheme is slower in Victoria than in any other jurisdiction.
There are around 300,000 people in Melbourne currently accessing the wage subsidy, and there are fears many will end up without a job when the scheme ends today.
Australian Retailers Association (ARA) CEO, Paul Zahra, said the end of the program could sound the death knell for a lot of businesses, particularly in Melbourne’s CBD, but it was difficult to predict how many.
“There’s going to be this moment of truth when JobKeeper is gone because people will have to surrender to the situation that they’re in, one way or another,” he said.
“We don’t expect a fiscal cliff, but we do expect a softening of retail sales, specifically in Victoria.”
The imminent end of JobKeeper is a short-term concern for many retail businesses, but there are other longer-term challenges.
Where have all the customers gone?
Two of the major drivers of retail spending in Melbourne’s CBD are office workers and international tourists, and there is no certainty about either of those sectors returning to their pre-COVID levels anytime soon.
Office workers are starting to return to workspaces in Melbourne, led by public sector employees, but there’s a long way to go.
The Property Council of Australia’s latest figures show office occupancy in Melbourne was at 24 per cent in February, compared to 48 per cent in Sydney, and above 60 per cent in all other capital cities.
There’s no certainty that offices will ever return to their pre-pandemic existence, and no great desire from employees for that to happen quickly.
“What COVID did do is accelerate trends that were already occurring in the industry and across business generally, and one of those trends has been people wanting flexible working situations so this has forced that on employers,” Paul Zahra said.
That means fewer people shopping at lunchtime or after work, and few people staying in the city after work for dinner or drinks.
“Our pedestrian foot traffic data shows that we’re still really only at 50 per cent of pre-COVID levels of people pulsing through our streets and of course retail is heavily reliant on those people coming into the city,” Sally Capp said.
There’s a real battle looming to encourage the big employers to get their staff back into city offices, or find some way of encouraging people to make their own way into the city centre.
“There’s been a massive trend towards people shopping locally, which means that CBD locations don’t fare as well, there’s concerns around safety, catching public transport into the city,” Paul Zahra said.
Getting people back into the city is the key to recovery
Mr Zahra said there was still a level of cautiousness in suburban parts of Melbourne about coming into the city, despite it being more than a month since the last case of community transmission of coronavirus.
“Those concerns really shouldn’t be there because research tells us that people who are wearing masks and practising COVID-safe practises through social distancing shouldn’t be concerned, but it’s definitely having an impact on consumers.”
There’s pressure being exerted on bigger, private sector employers to accelerate the return of workers into city offices, but there are other moves being made to fill that gap.
The Property Council, Australian Retailers Association and the City of Melbourne are launching a scheme to encourage more people into the city, particularly on Fridays.
The scheme includes free or discounted food and entertainment offers, but also an encouragement for workers to “take the 4pm pledge” and knock off work early on a Friday.
There is also, of course, the return of football, and the extra foot traffic that comes with full or nearly full stadiums.
These may be small and incremental steps on the road to recovery, but Ms Capp is urging small business owners to stay positive.
Rohan Hehir will keep making coffees and toasties for the few people who wander down his laneway, hoping for things to pick up sooner rather than later.
“You’ve got to be optimistic in times like this and the way that things have come back, like, as soon as people were allowed back into the city they came back to us, which kind of says to me it’s going to keep on growing hopefully.”