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Aussie Retailers Worst Hit By Coronavirus Warned It's 'Tip Of The Iceberg'

Clothing, footwear and household goods retailers have been the worst hit as the impact of the coronavirus spreads to suppliers.

Managing director of furniture retailer Nick Scali says the coronavirus spread is delaying deliveries and access to stock is difficult, as many Chinese factories remain closed.

"Despite seeing a recent improvement in sales and store traffic, there is still uncertainty around the current level of consumer confidence, which has been exacerbated by the coronavirus outbreak and other factors," Anthony Scali told investors earlier this week.

But the Australian Retailers Association (ARA) has told 10 daily, this is just the tip of the iceberg.

"I can guarantee you it's more widespread," ARA Executive Director, Russell Zimmerman said.

"We are talking to a bunch of retailers yesterday who have been told by their suppliers they are having difficulties, there will delay in deliveries."

He said the worst affected has been clothing and footwear items and also household goods.

"We are expecting problems in due course, at the moment most retailers will be OK is because it was Chinese New Year most retailers know to bring in extra stock because they know the Chinese factories will close for the break," he said.

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On Friday Reserve Bank chief Philip Lowe said the potential risk to the Australian economy is bigger than SARS.

"The truth is not one of us know how this is going to play out," Lowe said.

Image: AAP

Since the SARS outbreak in 2002, China has grown from the world's sixth-largest economy to number two and is now Australia's top trading partner.

"We are hearing some reports of interruption to supply chain, many Chinese and Australian companies had inventory so they could deal with factory shutdowns, but you can't do that indefinitely," he said.

10 daily approached major retailers, who deny there is a current supply problem.

"We’ve seen no impact on our supply chain but we are continuing to monitor closely as the situation develops," a Kmart Group Spokesperson said.

"We source products from thousands of different suppliers, from all parts of the world and have options to source from elsewhere should supply from one of those areas be affected," Bunnings Managing Director Mike Schneider said.

The Just Group -- which owns Just Jeans, Dotti, Smiggle, Portmans and Peter Alexander declined to comment.

Image: Toll Group

Zimmerman said the impact "will bite in a few weeks time."

Unrelated to the Wuhan-based virus, but further compounding the problem, logistics giant Toll Group was forced to shut down many of its IT systems after discovering a cyber attack late last month.

It is now operating via a manual, paper-based system.

"A lot of retailers use their distribution centres rather than having their own warehouses and it is causing them a lot of problems and having huge problems finding stock," Zimmerman said.

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Providing regular updates on its website, on Friday, Toll Group said it was still trying to get their systems back up.

"We’re working to support those customers who are experiencing delays or disruption," the statement said.

This week photos of eerily empty metropolitan shopping malls have been shared on social media, which is also expected to impact retail sales.

"Where there is a high population of Chinese people, people aren't coming out shopping in those malls," Zimmerman said.

It's another blow to retail trade with the Australian Bureau of Statistics noting that "some effects from bushfires and associated smoke haze were apparent in NSW data", impacting December sales.

Contact the author alattouf@networkten.com.au