West Coast retailers bounce back.
Recently released data shows retail spending on the West Coast is bouncing back at a higher rate than the New Zealand average.
Estimates from Ministry of Business, Innovation and Employment (MBIE), based on electronic card spending data from Marketview/Paymark, show overall spending on the West Coast is currently 108% of last year’s levels. In comparison, national retail spending is at exactly the same level it was last year.
Development West Coast (DWC) chief executive Heath Milne says: “the COVID-19 crisis has been an incredibly challenging time for our business community, so it is great to see retail spending bouncing back.”
During the Alert Level 4 lockdown, electronic card spending on the Coast was down to around 50% of last year’s levels, rising to approximately 75% during Level 3.
Milne says industries on the Coast have experienced the impact of COVID-19 in vastly different ways.
Food & Liquor spending peaked at over 150% as people stockpiled goods prior to lockdown and since then has mostly remained above last year’s levels.
Since Level 2, there has been a spike in spending on Clothing, Footwear and Department Stores and Home & Recreational Retailing. These have all experienced spending rates around 200%.
The shift to Level 2 is also seeing a recovery, albeit slower, in spending on Food & Beverage services, which currently sits at 80% of last year’s rates.
West Coast industries most dependent on Tourism (Accommodation, Arts & Recreation services, and Transport & Travel agencies) have been struggling though, with spending less than 50% of last year’s levels. However, subsequent data shows a significant spike over Queen’s birthday weekend.
“The Tourism industry on the Coast has been highly reliant on international visitors, who inject around $271m into our economy each year. That is around 54% of our total tourism spend – the highest rate of all regions in NZ,” says Milne.
“The recovery in retail spending we’re currently experiencing is largely from domestic spending, such as Coasters catching up on shopping and Kiwis starting to travel domestically again after being cooped up under lockdown.”
The MBIE data shows domestic retail spending on the West Coast currently sits at 114% of last year’s levels, while international spending is only 31% of what it was this time last year.
“Given the uncertainty of when New Zealand’s borders will reopen, international spending is unlikely to recover any time soon.”
West Coast benefits most from Queen’s Birthday.
“To attract more domestic visitors to the Coast we’ve been running a number of targeted marketing initiatives. Our ‘Big Coast – Big Deals’ campaign got off to a great start, with the West Coast outperforming the rest of New Zealand over Queen’s birthday weekend,” Milne said.
Figures from a recent report compiled by Tourism New Zealand and Stats NZ’s Data Ventures revealed domestic tourism across New Zealand increased by 75% over Queen’s Birthday, relative to average tourism at COVID-19 Level 2.
The West Coast enjoyed the biggest boost, with domestic visitor numbers increasing 94.3%. The West Coast was followed by Fiordland, up 84.6%, and Mackenzie, up 83.8%.
DWC regional tourism manager Jim Little said much of the increase on the West Coast was due to a combination of good weather, a long weekend and deal-based advertising targeted at Nelson, Christchurch and Dunedin.
“The Big Coast – Big Deals campaign utilised digital billboards, press advertising and digital/social media driving customers to the ‘deals’ page on the website which saw a huge spike in site visitation,” Little said.
Stuart Brown and Jo Birnie join DWC.
Development West Coast (DWC) is pleased to announce the appointment of Stuart Brown as its new chief financial officer (CFO) and Jo Birnie as economic development manager.
“Jo and Stuart will be key members of our executive team as we navigate the current economic crisis and help lead the region through the COVID-19 recovery,” says DWC chief executive Heath Milne.
Stuart Brown has been appointed CFO, replacing Brent Ford who has been interim CFO since Mark Dawson left in January.
Mr Brown brings over two decades of finance experience to DWC.
Born and educated in the South Island, he worked in Matamata for 12 years in finance. He then travelled to the UK and worked in Canada and USA for eight years. Most recently, he was based in Australia where he led the finance teams for large international ASX listed mining companies.
Mr Brown is pleased to be returning home after a lengthy period away and brings a commercial focus to the role of CFO for DWC. He will be ensuring that compliance is maintained while allowing for an agile approach to business support.
“I’m looking forward to working with the wide range of businesses on the Coast and supporting the finance strategies that will help them thrive,” he says.
Jo Birnie also joins DWC, where she takes on the new role of economic development manager.
Born and educated in the UK, Ms Birnie started her career as a consultant. She moved to New Zealand in 2002, where she worked as a specialised HR practitioner with her time split between the South Island and Wellington, working in both the public and private sector, including HR Manager for Safe Air (Air NZ).
In 2009 she started her own business and HR consultancy where she has undertaken project/programme and change management positions across many agencies in the public sector and has worked with a wide range of SMEs, including many businesses on the West Coast as part of the Regional Business Partner Network.
Ms Birnie brings with her a wealth of knowledge of programme and change management, of implementing change and taking people on the journey. Her experience of navigating the machinery of government whilst recognising the regional level and the interdependencies of decisions will be invaluable for DWC going forward.
“The West Coast faces significant challenges ahead due to the impact of COVID-19,” says Mr Milne.
“I am confident that Stuart and Jo have the experience and expertise we need to ensure DWC continues its positive momentum.
“The skillsets they bring will enable us to better support our business community during this challenging time, as well as to leverage any opportunities the landscape ahead may present.”
Heath Milne | DWC Chief Executive | 15 May 2020
The Budget announcement by Minister of Finance Hon Grant Robertson is largely positive for the West Coast business community, but it will not solve all of the current and pending economic issues we face.
On the Coast, we are already experiencing a significant impact from the COVID-19 crisis with businesses closing and our unemployment rate rising to 7.5 percent. The full extent of the economic fall-out is yet to come, so against this backdrop the 2020 ‘Rebuilding Together’ Budget can be seen as a positive ‘first’ step towards recovery for the Country and our region.
The shift to Level 2 has been great news for the Coast. It has meant more of our businesses are open again, but we must acknowledge that it will be quite some time before business returns to normal.
We will require support from central Government to see us through this challenging time, so we are pleased to see an emphasis on business recovery in the Budget through targeted expenditure.
$3.2 billion extension of the wage subsidy scheme.
One of the most significant announcements in the Budget was the $3.2b extension of the wage subsidy scheme.
The Government’s wage subsidy scheme has been a lifesaver for many businesses on the Coast. The shift to Level 2 has seen more businesses reopen their doors, but there are various new challenges - changes in demand and consumer behaviour, and new social distancing regulations. As a result, an extension to the wage subsidy was needed.
The additional $3.2b will be more tightly targeted, with only businesses that have experienced or are forecasting a 50 percent drop in revenue eligible for the eight-week extension.
This will provide much needed relief for many businesses across our diverse sectors – particularly those linked to the tourism industry.
More than half of all tourist spending on the Coast comes from international visitors, so with the collapse of that market segment it is likely that most of our tourism operators as well as those in the retail and food services sectors will meet the new criteria for the wage subsidy extension.
But again, it is limited and will end in September unless further extensions are given. To remain viable in the foreseeable future, tourism businesses will have to use the breathing space the subsidy provides to try to reposition themselves and pivot towards the domestic market where possible.
$400 million targeted tourism support fund.
The closure of New Zealand’s borders to international visitors has hit the Coast hard. Tourists inject half a billion dollars a year into our region - $271m of that comes from international visitors.
In that respect, the $400m allocated by the Government for targeted tourism support for the whole country is just a drop in the bucket. However, Minister of Tourism Hon Kelvin Davis has stated that this fund is just the start, and additional support will be rolled out over the coming months.
At the moment, details of how the $400m will be spent are quite vague. Some will be allocated to a ‘Transitions programme’ to provide advice and guidance for businesses on how to hibernate or redesign their business for the domestic or Australian market. DWC has already been working in this space, including hosting a webinar on how to hibernate your business. We have been advised that tourism businesses can ‘register their interest’ for the Transitions programme via the MBIE website.
A ‘Strategic Tourism Asset programme” will provide bespoke support for businesses that have a positive flow on effect to the wider community. The example given by Minister Davis was Whalewatch Kaikoura. How these businesses will be assessed and what the bespoke support will look like is not clear. Again, businesses can register their interest via the MBIE website.
Other parts of the package include setting up a Ministerial Tourism Recovery Group made up of Minister Davis, Eugenie Sage and Fletcher Tabuteau along with a taskforce to look at the future of tourism.
Tourism NZ will now focus on domestic marketing; however, details of the campaign are again difficult to obtain at the moment.
Next week we will be hosting Minister Davis for a webinar on ‘restarting regional tourism’. It will present a great opportunity for our tourism operators to ask questions so we can gain a better insight on how this package may help the West Coast.
$1.6 billion trades and training scheme.
The Government has announced that apprenticeships and vocational courses in ‘critical industries’ will be made free over the next two years for everyone.
This is particularly good news for the West Coast, as our region has one of the highest rates of 15-24 year olds ‘not employed or engaged in education or training’ (NEET). Our NEET rate is 15 percent, compared to the national average of 12 percent.
To build a robust economy for the future we need an educated and skilled workforce, so any additional funding for apprenticeships and vocational courses made available to the Coast will help our region going forward and will help overcome our existing staff shortages in the trades.
$19.3 million to place 10,000 people into primary sector jobs.
The Government has also allocated $19.3 million over four years to help recently unemployed people retrain and find jobs in the primary industries. The aim is to place at least 10,000 people nationally in jobs in the intermediate term.
The West Coast economy has traditionally relied on the backbone of a strong primary sector. The primary sector contributes 23.4% of our GDP and provides 14.2% of our jobs.
Many farmers on the Coast struggle to find workers, so this initiative has the potential to support growth for our region by attracting workers to this highly productive sector. On the West Coast Agriculture, Forestry and Fishing jobs add an average of around $164,000 to our GDP – so any growth here will benefit the whole region.
$1.1 billion for restoring the environment.
Almost $1.1 billion from the Budget will be put towards restoring the environment with the Government expecting to create about 11,000 jobs nationally. Given how big the Department of Conservation estate is on the Coast, we are expecting significant benefits here.
Ideally, this package will allow businesses considering redundancies and downscaling to redeploy their staff on environmentally focused activities. Given the news of some of the recent big closures in the Glacier Country, there is a great opportunity for the Coast to get behind this major initiative.
It will support retraining and retaining workers in the region by engaging them in meaningful work before they can move back into the tourism sector as demand returns.
Infrastructure and transport investments.
The Government has also allocated significant funds to an infrastructure investment package ($3.2 billion) and a railway package ($1.2 billion). Our region’s Mayors and our Economic Recovery Steering Group have already put forward a number of shovel ready projects to the Government for the West Coast, so we are expecting some significant job creating projects to come from this.
Further business support.
The Budget has also outlined various other packages that should benefit Coast businesses, including increased support for R&D and e-commerce support. We are still awaiting specific details on these packages and how West Coast businesses will be able to access them.
Overall, the Budget will go some way towards helping the West Coast recover, but it certainly will not solve all of the economic and social issues we are facing. There is still $20 billion in unallocated funds and as one of the hardest hit regions we should rightly expect more governmental support.
DWC is about to send out another Coast-wide survey to our business community to help better gauge the impact of COVID-19. We would greatly appreciate your participation in this, so we can provide an evidence-based overview to inform Government and provide support.
Media Release: 15 May 2020
62 percent of respondents to a recent survey of West Coast businesses are reporting major financial impacts from COVID-19 with sales/revenue down 25 percent or more. 26 percent of businesses surveyed also reported reducing their staffing levels.
This data was gathered as part of a survey of local businesses conducted by Development West Coast (DWC) during Alert Level 2.
The survey received around 200 responses between 18 April – 1 June.
64 percent of those surveyed believed their businesses will survive the current COVID-19 crisis, 26 percent were unsure, 5 percent have put their businesses in hibernation and around 4 percent are either considering closing or have already closed.
One respondent said: “We will survive but will have to borrow about $500k to get us through the next 12 months.”
Another respondent said: “We’re going to come out stronger, it has forced us to make some tough business decisions that we needed regardless of COVID.”
The biggest challenges currently facing West Coast businesses were cited as reductions in sales/revenue, customers numbers and staffing hours.
Over the next three months, 58 percent of businesses expect their sales/revenue will be down 25 percent or more. Employment levels are expected to decrease further with 30 percent of businesses stating they will have to reduce staff over the next three months.
One respondent said: “We do not expect to be letting staff go, but we may face reduced production and encourage staff to take annual leave.”
Amongst those surveyed, businesses in the Westland District have been the most heavily impacted by COVID-19. 75 percent of businesses in Westland have reported major negative financial impacts, in comparison to 51 percent of respondents in Grey and 50 percent in Buller.
32 percent of respondents from Buller have reported reducing staffing levels, 30 percent in Westland and 17 percent in Grey.
DWC chief executive Heath Milne said the survey was undertaken to gain a better understanding of the impact of the pandemic across the Coast and how this has changed over time across the different industries.
“These insights will enable us to target our support more appropriately to meet the needs of our business community. It will also allow us to provide an evidence-based overview of the situation to Government to advocate for further support for the Coast.”
An earlier survey, sent out just as New Zealand entered Alert Level 4 lockdown, showed 50 percent of respondents reporting significant financial impacts from COVID-19 in comparison to 62 percent now.
Mr Milne said the results of the surveys demonstrate the changing impact on businesses during the pandemic.
"All sectors in our economy have been affected. However, businesses in tourism and travel have understandably been the hardest hit.”
96 percent of tourism and travel businesses reported a major negative impact on their sales/revenue compared to 48 percent for the rest of respondents. 45 percent of tourism and travel businesses have reported reducing staffing levels in comparison to 18 percent of other businesses.
One respondent said: “If the borders open, we will definitely survive, however if we are reliant on domestic travel it will be extremely difficult.”
Of businesses in tourism and travel who are heavily reliant on international visitors, 47 percent feel they can adapt to meet the domestic market, while 42 percent are unsure if they can.
A business which is already a popular domestic visitor activity, with pricing set at low margins to be affordable for Kiwi families, was concerned about the increased emphasis on encouraging ‘deals’. “We now have significantly increased competition for a market we already supported.”
The survey highlighted how businesses have responded to the current crisis by utilising different forms of support and advice.
86 percent of businesses had used the Government’s wage subsidy and leave schemes.
A frequent comment amongst respondents was: “We were only able to maintain staff with the wage subsidy.”
37 percent utilised free business webinars, 23 percent accessed the Government’s small business cashflow loan scheme and 23 percent have received advice and support from DWC.
One business said they had received excellent support from DWC “through information, encouraging staff upskilling, additional borrowing for cashflow/creditors, the (delivery) rebate scheme and the (Regional Business) Partner scheme. Wow.”
Businesses were asked which further areas of support and/or advice would best help them manage the impact of the pandemic. 64 percent cited the wage subsidy extension programme, 44 percent marketing support and 19 percent financial advice / cashflow management.
A common concern voiced in the survey was around when the wage subsidy runs out. “Post-subsidy we have concerns about redundancies.”
Another business said: “It’s up to me. No more handouts. I will work this out.”
Mr Milne said: "At DWC, our team has directly engaged with over 360 businesses over the last two months, and the survey results reinforce much of what we are seeing on the ground.
“As usual Coast businesses are demonstrating a lot of resilience, but there is a very real need for continued targeted financial assistance and support services to help them adapt to, and cope with, the challenges that are being presented.”
During the last two months of the pandemic, DWC has delivered COVID-19 Business advisory vouchers to around 70 West Coast businesses for professional services, worth around $140,000, to assist in managing the impact of COVID-19. DWC has also fast-tracked commercial finance worth $1.75m to 12 businesses.
“These aren’t the only ways DWC can help. We are involved in a range of COVID-recovery initiatives and have a variety of support services that may suit your needs,” Mr Milne said.
Chris Milne appointed to DWC Advisory Body.
Chris is currently a Managing Director at Murray & Co a leading New Zealand investment banking firm providing expert financial, strategic and transactional advice to companies and other commercial entities. He joined Murray & Co in 2006 following a successful career in senior finance roles with large corporates both offshore and in New Zealand.
His previous roles have included seven years at Ngāi Tahu as CFO and COO and four years in senior finance positions offshore with Inchcape plc in the UK, Singapore, and Japan.
“I look forward to making a contribution to support DWC’s role in promoting activity to underpin sustainable economic development for the West Coast community,” he says.
Chris is also a Trustee of the Christchurch Symphony Orchestra Foundation, and a member of the Management and Finance Board of the Catholic Diocese of Christchurch.
He will replace Keith Rushbrook who has been on the Advisory Body since 2007.
DWC Chief Executive Heath Milne says Mr Rushbook has made a significant contribution to the West Coast over the past 13 years, and his professionalism and insights will be missed.
“We welcome Chris to the Advisory Body. With his impressive 30-year career in finance, he will bring a lot of experience and business acumen to the role,” says Heath Milne.
“As we begin the economic recovery process from COVID-19 the Advisory Body will play a key role in ensuring the right investment decisions are made to support West Coast businesses.”
Chris Milne joins David Steele and Jenn Bestwick on DWC’s Advisory Body.
Media Release: 12 May 2020