Australia’s coronavirus crisis could destroy department stores

How Australia’s coronavirus crisis could be the final nail in the coffin for the nation’s department stores as they battle to stay afloat

  • The pandemic could wipe out Australia’s already struggling department stores 
  • Larger fashion retailers are most at risk as consumers save their money
  • Scott Morrison announced a second round of rescue measures worth $66billion 
  • Myer and David Jones will suffer despite Morrison’s business rescue package 
  • Non-essential services across Victoria and New South Wales are now closed 
  • Coronavirus symptoms: what are they and should you see a doctor?

The coronavirus pandemic could wipe out Australia’s already struggling department stores.

The Australian Retailers Association has warned larger fashion companies are most at risk as non-essential services go into lock down and consumers save their money.

ARA’s Executive Director Russell Zimmerman said larger retailers like Myer and David Jones will flounder, despite Scott Morrison’s business rescue package. 

The prime minister on Sunday announced a second round of drastic rescue measures worth around $66billion, including grants of up to $100,000 to help small businesses pay their staff. 

‘It’s an excellent package but it does not cover some of the bigger business that we’re dealing with that, if this continues, will unfortunately head into liquidation,’ Mr Zimmerman told the Herald Sun. 

The coronavirus pandemic could wipe out Australia’s already struggling department stores

The prime minister on Sunday announced a second round of drastic rescue measures worth around $66billion, including grants of up to $100,000 to help small businesses pay their staff

The prime minister on Sunday announced a second round of drastic rescue measures worth around $66billion, including grants of up to $100,000 to help small businesses pay their staff

‘I have been in discussions with retailers in the large sector who are extremely worried, particularly at this point in time, there is concern in the discretionary spend retailers – so clothing, footwear, accessories.’

The ARA and the Shop, Distributive and Allied Employees’ Association have called on the government to provide bailout funding specifically for the retail sector. 

SDA National Secretary Gerard Dwyer said since Sunday’s announcement that nonessential services will close across New South Wales and Victoria, retailers have gone into panic mode.  

 ‘Just this morning I was talking to a casual employee who’s gone from 30 hours a week now to a single shift of three hours,’ he said. 

Mr Dwyer said there can’t be any limits in the government rescue fund based on business size, and the money should be given to any retailer – no matter how large -facing threat amid the coronavirus crisis.

Alongside the cash payments, the government is launching a massive loan scheme worth $40billion under which it will guarantee 50 per cent of cheap loans given from banks to struggling companies to keep them from going under. 

‘We will be supercharging our safety net, we’ll be supporting the most vulnerable to the impacts of the crisis, those who will feel those first blows,’ Mr Morrison told reporters on Sunday.

‘(We will) preserve the businesses that comprise our economy so on the other side they can bounce back strongly and don’t have to reassemble themselves from the ruins of failed businesses.’

Sunday’s package includes a significant expansion of the wage-based cash payments to small businesses already announced – measures Labor has flagged as supporting when parliament sits on Monday.

Larger retailers like Myer and David Jones will flounder, despite Scott Morrison's business rescue package. Pictured with treasurer Josh Frydenberg

Larger retailers like Myer and David Jones will flounder, despite Scott Morrison’s business rescue package. Pictured with treasurer Josh Frydenberg 

Small and medium businesses and not-for-profits that employ people will now receive a full rebate on income tax withholdings, up to $100,000.

They’ll all get a minimum of $20,000 – 10 times the amount announced previously.

This is expected to help some 690,000 businesses employing about 7.8 million people, along with 30,000 not-for-profits who weren’t previously set to receive the cash flow injection.

A coronavirus supplement of $550 a fortnight will be added to the Jobseeker payment – known as Newstart until last Friday – and access to the dole will be relaxed and waiting period waived to allow casuals and sole traders whose income drops off.

Economists forecast nearly a million people could be out of work by October as the nation stays at home in a bid to slow the spread of the virus. 

What’s in the second stimulus package? 

 CASH TO KEEP AUSTRALIANS IN JOBS

Eligible businesses that withhold tax to the ATO on their employees’ salary and wages will receive a payment equal to the amount withheld, up to a maximum payment of $100,000.

Eligible businesses that pay salary and wages will receive a minimum payment of $20,000, even if they are not required to withhold tax.  

This new measure is worth $25.2billion.

It is open to businesses with turnover under $50million and will now also be available to eligible not-for-profit charities 

It will benefit around 690,000 businesses employing around 7.8 million people and 30,000 not for profits

SUPPORTING SMALL BUSINESSES WITH LOANS

A new Coronavirus SME Guarantee Scheme will be able to be accessed by eligible banks and non-bank lenders 

The Commonwealth will guarantee 50 per cent of an eligible loan to small businesses that have been impacted by the coronavirus

The Scheme will have the capacity to support lending of $40billion to SMEs

SMEs that have less than $50m turnover per year will be eligible under the Scheme

Loans will be used for working capital purposes and be unsecured and it will be for loans granted within 6 months starting 1 April 2020

The Scheme will apply to new or existing customers of banks and non-bank lenders. It will be repayment free for 6 months

The maximum loan will be $250,000 for a term up to 3 years

It will not apply to re-financing of existing customers. Those already have existing loans that will benefit from the ABA announcement

  

 

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