Business revenue has been impacted more by the latest COVID-19 lockdown than it was in 2020.
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Arts and recreation services, accommodation and food services and retail trade the sectors hardest hit, more businesses are changing their business model and fewer opening as normal.
But despite that businesses are more optimistic than they were 12 months ago.
Those are the findings of a new survey of businesses released by Business Illawarra.
When the present lockdown was extended in July businesses in the Illawarra were surveyed as part of statewide research conducted by Business NSW.
The results released by Business Illawarra show how dramatically local businesses have been impacted by the 2021 lockdown.
Among those not surprised by the findings is Wollongong businessman Lube Markovski who has run a string of successful businesses in the Illawarra in recent decades.
Mr Markovski is the Grill'd Wollongong franchisee and a co-owner of family business Charli & Kate.
He said both businesses have been more negatively impacted by the lockdown that started six weeks ago.
"Our business model has definitely changed," he said.
"During the 2020 lockdown our hair salons were open whereas they are closed now.
"At Grill'd we are still operating just as we did last year.
"But we are noticing a definite downturn in revenue.
"People have definitely tightened up their expenditure across the board."
Mr Markovski said he has been forced to relook at his business model to ensure Grill'd remains profitable.
He said over 90 per cent of food orders are third line deliveries, which means people are using platforms such as Uber Eats, Deliveroo and Menulog.
"That is really positive because it is generating cash flow, but the concern again when we look at our business model is they get 30 per cent of everything we send out," Mr Markovski said.
"So all of a sudden we have a 30 per cent extra cost to our business we didn't have before.
"Before COVID we were lucky to do 10 per cent of that business where now we are doing 90 per cent.
"So that is a cost that is forcing us to have a closer look at our business.
"The concern is the only variable you have is wage costs."
With salons, online retail is becoming a bigger and more important part of the business as people's buying habits permanently change.
"I think for every retail business, online has got to be part of your plan now," he said.
"If it is not you are going to be left behind.
"And if you are not reviewing your business models you are going to get left behind."
Mr Markovski thinks there is more optimism this year because after every lockdown so far there has been a huge bounce back. And he expects that will happen again.
However, he was concerned that Israel, the first country in the world to get most of the population vaccinated, was currently in lockdown again following a spike in positive COVID-19 cases.
He was also worried that people are not not spending as much as they did 12 months ago and, despite all the government promises of support for business, he is not seeing any in the Illawarra.
"People definitely don't have that JobKeeper and JobSeeker mentality this year," he said.
"And I don't know of any businesses at the moment that are receiving any support from the government.
"I actually think a lot of businesses are on the brink of whether they are going to open again."
Business NSW survey findings;
- Revenue impacts on Illawarra businesses were hardest following the first two weeks of the current lockdown (down 45 per cent) than they were for the first two months of the March 2020 lockdown (when they were down 41 per cent), and much harder than the first two weeks of that lockdown (when they were down 32 per cent).
- Statewide, the hardest hit sectors in revenue terms have been arts and recreation services (down 68 per cent), accommodation and food services (down 61 per cent) and retail trade (down 51 per cent).
- Businesses have adapted their operating models in growing numbers, with many more businesses working under a changed model during the 2021 lockdown (53 per cent) than in 2020 (38 per cent).
- Fewer businesses have been opening as normal during the current lockdown (30 per cent) than in 2020 (47 per cent).
- Business confidence is significantly higher than the same period in 2020 with a key difference between the two lockdowns being that vaccines against Covid-19 now exist.
Business Illawarra executive director Adam Zarth said the COVID-19 pandemic has seen many businesses draw into their cash reserves as they contend with closures and restrictions.
Mr Zarth said that has left many in a severely weakened state as the current lockdown continues.
"It should be extremely concerning for governments that Illawarra businesses have reported a 13 percent harder impact from the first fortnight of the current lockdowns than from the equivalent fortnight of the March 2020 lockdowns - despite being better prepared and knowing what was coming," he said.
"While the existence of vaccines and the ongoing rollout is keeping business confidence higher than it was last year, we expect these figures to drop substantially as the lockdown continues into its second month here in the Illawarra.
"The hospitality, arts, events and tourism sectors have of course been hardest hit, and the drop in Sydney demand has compounded a lack of local consumer confidence there."
"It is also notable that businesses are 'pivoting' their business models to adjust to lockdown in far greater proportions this year, and we expect that to be a permanent feature in these sectors of the economy even once lockdowns ease."
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Greg Ellis
Almost four decades in electronic, print and digital media. A writer, presenter, emcee, photographer and videographer with degrees in business management, marketing and human resources and tertiary qualifications in photography.
Almost four decades in electronic, print and digital media. A writer, presenter, emcee, photographer and videographer with degrees in business management, marketing and human resources and tertiary qualifications in photography.
