Small Business Data Reveals Auckland's Lockdown Struggles

Small business sales fell 7.1% y/y nationwide, down 18.4% in Auckland

Wellington — 28 October, 2021 — Xero, the global small business platform, today released its Xero Small Business Index for September 2021 showing the full extent of a whole month in lockdown for small businesses in Auckland.

National small business sales were down 7.1% year-on-year (y/y), which was largely driven by an 18.4% y/y decline in Auckland.

Xero’s Managing Director for New Zealand & Pacific Islands, Craig Hudson, says this is the largest drop in sales since April 2020 during the initial Alert Level Four lockdown, which saw sales fall 43.9% y/y across Aotearoa.

"On the whole the small businesses sector held up better in this nationwide lockdown than the first lockdown. But as much as the world of firsts is over, the pain for small business is still very real.

"The uncertainty is painful. Like all of us, small business owners don’t know how long we will be in lockdown. But, particularly in Auckland and Waikato, small business owners have the added stress of not knowing how long their operation and income will be affected.

"Lifting our vaccinations is the key way that we can support small businesses. This is how we can help ensure that all SMEs can open for business, especially now as some prepare for their busiest period leading into the Christmas and summer holidays.”

Sales down, days to get paid up during lockdown

The decline in small business sales in Auckland was partially offset by small rises in other major cities, less impacted by restrictions, such as Canterbury (+3.3% y/y) and Wellington (+2.1% y/y).

Despite this, most industries recorded a fall in sales, led by hospitality (-16.8% y/y) and construction (-12.9% y/y). Only professional services recorded a slight positive growth of +0.3% y/y, reflecting its work-from-home capability.

Furthermore, New Zealand small businesses waited an average of 26.2 days to be paid in September. This is 1.8 days longer than August, 2.7 days longer compared to July, and the highest since June 2020.

“What this tells us is people are holding on to their money, putting further stress on small business cashflow. This points to the uncertainty of what the near future holds for Aotearoa,” says Hudson.

“Right now small businesses are running very low on cash. They will be relying on a quick bounce back like we experienced after the 2020 lockdowns, but they’re worried because this isn’t guaranteed with Covid-19 likely to be in the community. It's more important than ever that we do everything we can to support our local businesses at this time.”

The rise in wait times was again driven by Auckland small businesses, which saw an increase of 4.4 days to 29.6 days m/m. In contrast, Wellington small businesses were the quickest to be paid at 23.3 days, a rise of 0.9 days.

The late payments measure, which tracks the average number of days that invoices are paid late, pushed out to 8.2 days, an increase of 1.5 days. Small businesses haven’t been paid this late since June 2020.

Small Business Index drops below 100

The New Zealand Small Business Index, part of Xero Small Business Insights, fell 16 points in September to 86 points.

This is the third consecutive monthly fall, the lowest level since May 2020 and the first time the Index has been below 100 (representing average conditions) since January 2021.

Despite this, the lessons learned from last year have helped to soften the impact.

“The 2020 nationwide lockdown took us all by surprise, not many small businesses were prepared to work remotely at a moment’s notice. Today, our small business sector is better prepared with established digital tools which is encouraging to see,” says Hudson.

“As the tight lockdown restrictions linger in Auckland, the ongoing importance of digitalisation for Kiwi small businesses to pivot and remain functional during lockdown is clear. This is why we’ve developed a guide to help small businesses take the first steps towards digitalisation, and to show them how to establish top wellbeing programmes.

“Now the Government has confirmed a pathway for lifting restrictions, we need to do everything we can to help our small business community survive this uncertainty.”

For further information on the Xero Small Business Insights September metrics please refer to the XSBI Update for New Zealand.

We are now sharing regional and industry splits on our public website. This data goes back to January 2017 for all the industries and regions we have sufficient sample size for.

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