As coronavirus restrictions start being lifted across Australia this week, questions about how the economy will recover are being raised. There seems to be political optimism with Prime Minister Scott Morrison and the Treasury expecting over 800,000 jobs to return in a reasonable amount of time. However, experts weigh in differently.
In today’s article, we’ll be going through what different experts in the field are predicting for the future of the Australian economy and the retail industry. We’ll also take a look at the changes that we’ve already seen here in our Workit eCommerce Hub. Though the economy is unlikely to go back to normal any time soon, it looks like there is hope in the eCommerce market.
When will the Australian economy return to normal?
Compared to the government, experts are less certain that the economy will rebound quickly. The Reserve Bank expects unemployment to reach 10 per cent this year. The Australian economy is forecasted to finish 6 per cent lower this year before bouncing back next year. This would mean the economy wouldn’t return to the size it was at the end of 2019 until the end of 2021.
Commonwealth Bank’s senior economist Belinda Allen has similar expectations for this year. However, she doesn’t think the economy will return to normal by the end of 2021. Similarly, AMP Capital’s chief economist Shane Oliver isn’t expecting the cash rate to start increasing again for at least another three years. In this scenario, the economy won’t return to normal until the end of 2022.
What will the retail industry look like post-COVID?
Research analysts from UBS are expecting three consumer behaviour changes to come about as a result of the coronavirus pandemic. In particular, a shift to online shopping, a change in eating patterns, and more interest in private-label brands and new health products. We’re most interested in the accelerated shift to online shopping.
KPMG analysts are telling the retail sector to be prepared for the eCommerce wave. In fact, they’re expecting there to be two eCommerce waves and suggesting that it will be the key for Australian retailers to survive post-COVID. We’re already in the first wave where people who normally go to shopping centres are shopping online. In the second wave, eCommerce will grow as consumer confidence recovers.
In particular, growth is expected to be seen in the grocery and liquor industry. UBS is expecting this to benefit Coles and Woolworths, especially since competitors such as Aldi don’t have an online presence in Australia. The health and beauty industry, as well as the recreational and other goods industry have growth potential as well.
Growth in eCommerce is already evident
Here at Workit Spaces, we’re already seeing the interest in eCommerce growing. Over the past few months, certain eCommerce businesses in our coworking space have seen an increase in sales with less people wanting to go to physical stores. In the last week, we’ve also seen a dramatic spike in the amount of eCommerce businesses looking for a new space.
New data from PayPal showed that they had their biggest month in history as with people buying online during the lockdown. They saw their sign-ups tripled and the highest number of transactions ever processed. The new users were even made up of more people in the 50 or older age group than they’ve seen before.
Ultimately, it looks like experts see eCommerce as the key for those in the retail industry to survive. The eCommerce market was already on the rise and the pandemic has only accelerated its growth. Though predictions for the economy are a bit more mixed, we’re hoping that Australia will return to normal in due time.
What have small businesses experienced during COVID-19?
We’ve created the COVID Reality series to follow the life of small business entrepreneurs during COVID-19 in our coworking space and eCommerce Hub. Make sure to check out our COVID Reality YouTube playlist! Let us know what your experience has been like and make sure to subscribe to our channel for updates.