A majority of Aotearoa/New Zealand retailers are not feeling positive about their business prospects as they head into winter this year.
This was revealed in the latest Retail Radar quarterly survey by peak body Retail NZ of its members.
“The post-election optimism recorded in the Retail Radar survey at the end of 2023 has dissipated as retailers struggle with inflation and soaring costs,” Retail NZ CEO Carolyn Young said. “Skyrocketing insurance costs and a lack of consumer confidence are impacting heavily on profitability.”
The latest survey covered the first quarter of 2024. The first months of the year are important for many retailers, with holidaymakers and international tourists typically lifting spending.
However, a majority 64 per cent of respondents reported they did not meet sales targets for the January-March period and almost a third of businesses (32 per cent) are unsure whether they will survive the next 12 months.
“This is more pessimism than we saw in the equivalent period of 2023 when 28 per cent of businesses were not feeling confident of survival,” Young said.
With no improvements expected in the near-term economic outlook for New Zealand, respondents do not expect their sales to improve in the coming April-June quarter, with more than half (55 per cent) saying they do not expect to meet their targets.
Inflation remains the most significant issue for 62 per cent of retailers. This is followed by insurance cost increases (55 per cent) and wage increases (52 per cent). Inflation and wage increases were the top two issues in the previous quarter.
Almost 60 per cent of respondents said their insurance costs had increased significantly in the past year. With council rates and other costs also rising, at a time when sales are falling, some retailers reported that they were considering cancelling their policies.
“Inflation is affecting all business costs, plus consumer spending is slowing with retailers reporting that customers are shopping less and buying less when they do shop,” Young said.
“As we enter the traditionally slower winter months, retailers will be tightening their belts in anticipation of slow sales and uncertainty. Retail NZ is hoping the upcoming Federal Budget will help restore confidence to the marketplace and provide a pathway out of recession.”