Summary

  • ASX retail stocks are set to get a breather after the Victorian State Government has allowed the re-opening of retail stores starting from Wednesday. 
  • Economic activity would resume to some extent as hard lockdown measures ease. 
  • Victoria continues to lag in terms of economic recovery compared to other States, and the recent decision by the Government will aid the recovery. 

Victoria has been under hard lockdown restrictions for the second time since early July this year. Melbourne, the state’s capital, is an economically important region and has been shut for almost four months now.

Economists have been of the view that Victoria’s lockdown has added to a slow and uneven economic recovery. Incoming data also suggests that Victoria has been lagging behind other states in terms of economic recovery.

Premier Daniel Andrews announced to end stay-at-home orders from Tuesday midnight. 

Policymakers now understand the disease better than they did six months ago. In other parts of the world, there is a growing realisation that a second wave is stemming, especially in Europe and the US. 

In Australia, the summer season is approaching unlike most part of the world. Winter season in other parts of the world will likely increase cold and flu infections, therefore higher risks of people catching the COVID-19 virus.

Top politicians of Australia have been critical of the approaches adopted by the Victorian Government led by Mr Andrews. They also continue to emphasise on testing, tracing, and isolation to limit the spread of the virus. 

Related: Consumer Spending and Confidence dips due to COVID-19 outbreak in Victoria

Retailers set to open stores

According to the Australian Bureau of Statistics, Victorian retail sales recorded a fall of 12.6% in August and a minor fall in September. In the September print, Victoria was the only state having retail turnover below levels recorded in September 2019. 

Starting from Wednesday, the State will allow opening of all retail stores, beauty and personal services, shopping centres, and food courts. Cafes and pubs will operate with a limited number of people. 

Although there would be no strict stay-at-home orders in place from tomorrow, a 25km travel limit needs to be adhered by Victorians. 

Retail operations, especially close contact services like beauty and personal services, would also embed a COVID-safe protocol with people wearing a mask.

After months of online shopping, Victorian consumers would be inclined to visit stores and start spending physically, albeit with restrictions on the number of people allowed at the stores. 

It would also mean that a lot of jobs would come back online. ASX-listed retailers would also re-open stores in Victoria. 

Myer Holding Limited (ASX:MYR) is set to re-open Metro Melbourne stores. Kmart, subsidiary of Wesfarmers Limited (ASX:WES) would also re-open stores in Melbourne. JB Hi-Fi Limited (ASX:JBH) is likely to follow suit.

Some other ASX retailers in similar lines include Nick Scali Limited (ASX:NCK), Premier Investments Limited (ASX:PMV), Shaver Shop Group Limited (ASX:SSG), Mosaic Brands Limited (ASX:MOZ), and Accent Group Limited (ASX:AX1).

 

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