Aotearoa/New Zealand retailers are expected to see some silver linings in the newly released federal budget, but peak body Retail NZ confirms there is little immediate prospect of a turnaround in consumer spending.
It comes as the volume of retail sales lifted by a weak 0.5 per cent in the March 2024 quarter to NZ$25 billion (A$23.06 billion) compared to the December quarter, according to Stats NZ, with the December quarter down 1.9 per cent.
For the clothing and footwear category, sales volumes were up by NZ$28.6 million in the latest quarter following a NZ$48 million drop in the December quarter.
Department stores are fairing worse, with the latest quarter showing a sales volume drop of NZ$28.7 million, following a $37.3 million drop in December.
However, compared to the same quarter last year, fashion sales have dropped by NZ$76 million, with department stores down NZ$131 million.
And despite the slight lift in retail volumes overall quarter-on-quarter, yearly results show overall retail sales volumes dropping NZ$656 million from the March 2023 quarter to the March quarter this year.
Retail NZ CEO Carolyn Young said it was good to see the detail of promised tax cuts in the new federal budgets, adding that retailers would be hoping to see that translate into spending at the register. However, she said it was unlikely to provide immediate relief.
“In just the last two days, we’ve heard that [department store] Smith + Caughey’s is likely to close next year and [loyalty program] Flybuys is pulling out of New Zealand, with the loss of hundreds of jobs,” Young said.
“The tax cuts won’t kick in for two months and with signals from the Coalition Government that there will be no return to surplus for several years, Retail NZ is not expecting to see any improvement in consumer confidence.
“So retailers are unlikely to see an uplift in spending for some time. Our members will need to continue tightening their belts in anticipation of slow sales until confidence returns to the marketplace.”
Meanwhile, Young commended the investment towards tackling retail crime in the Budget, with increased spending on policing, serious youth offenders and rehabilitation of offenders.
“With retail crime continuing to be a huge issue for our members, we are pleased to have confirmation of plans for more Police on the beat and more efforts to turn around the lives of offenders,” Young said.
“There was also good news on plans for infrastructure improvement. Along with the planned changes to the Resource Management Act, this will add resilience to our regions by supporting robust supply chains for freight, and offering an easier path for developments.”
More broadly, Retail NZ hopes that bigger investment in education will increase work-readiness in young people, adding this is one of the major challenges for retail employers, with members regularly reporting that young people lack the basic skills needed.
Retail NZ also added that it couldn’t identify any allocation for freight ferry services that transfer stock across the country.
According to the peak body, it appears that there is no allocation of funding, and therefore it is unsure what the plan is to replace the current service.