Representatives of Nevada’s retail, auto dealer, and small-business sectors say they’re preparing for a long, deep slump as the economy reopens following the pandemic.
The state’s hospitality-dependant economy shut down in mid-March and is seen as among the most vulnerable in the country as it deals with the financial fallout from the coronavirus.
Andrew MacKay, executive director of the Nevada Franchised Auto Dealers Association, said he expects at least a $1 billion decline in new vehicle sales this year. That hit would be felt in communities around the state and reduce tax revenue.
“This is going to be a long, long, painful recovery,” he told State of Nevada.
Outside of hotel-casinos, car sales are the biggest contributor to sales tax income for the state, MacKay said.
The state of Nevada has more than 270,000 businesses that the Small Business Administration categorizes as small businesses because they have fewer than 500 employees.
But Randi Thompson, Nevada state director for the National Federation of Independent Business, said a majority of those businesses actually have fewer than 20 employees.
She said small businesses in Nevada run the gamut from hair salons to manufacturing. They were an important part of the state's recovery from the Great Recession and Thompson hopes they play a similar role in this recovery.
However, just how many can survive the shutdown depends, she said, on how long they're closed for and if customers will come back.
"...Are customers going to come? People who are still afraid of this virus will stay home. So, even if we open doesn’t mean that they will come,” she said.
Thompson also noted that many small business owners were resentful of the rules for the shutdown.
“The frustration of what businesses had to close, what was considered essential and non-essential was really frustrating to a lot of business owners,” she said.
Bryan Wachter is the senior vice president of the Nevada Retail Association. He agreed that stores can open but customers may not return.
“We need folks to feel comfortable going back to a restaurant, going into a retail store. We need folks to be motivated to do those things and to start spending again,” he said.
But there are some questions for retailers that still need answers. Wachter said one of the biggest concerns expressed by his association's members is civil liability.
If a customer comes in contact with the virus at a store, could he or she sue the store?
“We’re very hesitant to have our members really kind of jump headfirst into this reopening pool,” Wachter said.
Another issue is employees. Many employees do not feel comfortable coming back to work. But to get the payroll benefits from the SBA, employers have to have the same number of employees on June 30 as they did in February, Wachter said.
“First and foremost, it’s making sure that our customers and employees are healthy and it's safe for them to come back to all of our locations. How we do that is very important,” he said.
The retail and car selling industries were already changing before the virus outbreak. More and more people are buying everything from furniture to pickup trucks online.
With stores and showrooms closed, that has accelerated.
“If there is one absolute during this COVID-19 crisis is that the retailing of automobiles, heavy-duty trucks has changed forever,” MacKay said.
Dealers who were forced to sell cars online during the pandemic are likely to continue to offer those services, he said.
“However, you can’t discount the fact that people still inherently love to go and touch and feel the product, smell the new car and they want to take it for a test drive,” MacKay added.
Wachter agreed that retail was also moving to more online sales and the outbreak just sped up that process. But he is concerned that small retailers who spent money on new technology and new ways to do businesses will see a long term payoff.
“That would be important for our owners to know as they figure out how they’re going to reopen, what reopening looks like and can they sustain what is going to be a slow economic recovery over the next couple of years,” he said.
With buying habits that were changing before the outbreak and those that developed during the shutdown, Wachter believes businesses of all kinds will need to give people a reason to come back.
“In order to convince customers to come out and to engage in economic activity, you’re really going to have to have some experience or some reason to go beyond, I don’t want to say hassle, but the: ‘why am I leaving my home?’" he said.
Wachter pointed out that during the shutdown he and his family spent $24 to watch the new "Trolls 2" movie. They ordered food from a local restaurant and made a night of it. The experience was less expensive than a trip to the movie theater and less of a hassle.
Randi Thompson, Nevada State Director, National Federation of Independent Business; Andy MacKay, executive director, Nevada Franchised Auto Dealers Association; Bryan Wachter, senior vice president, Nevada Retail Association.