New Zealand retailers are bracing for a challenging year, following weak sales during the peak Christmas trading period.
The New Zealand economy shrunk in the December 2022 quarter by -0.6%, according to gross domestic product (GDP) figures released by Stats NZ. This followed a rise of 1.7% in the September 2022 quarter.
In the same quarter, the retail trade and accommodation sector saw a -1.9% reduction in its GDP.
Retail NZ CEO Greg Hadford said the figures came as "no surprise" to retailers. According to research from the industry association, the sector has been experiencing a significant downturn in sales across the country.
“The decline in GDP in the December quarter is representative of what the sector has been communicating since mid-last year,” Harford said. “In the same period, Retail NZ’s Retail Radar found that while 63% of retailers had expected to hit their sales targets for the quarter, only 34% managed to achieve this.
“The significantly soft results in a key period for retailers across New Zealand has led to a pessimistic outlook for the sector going forward.”
Harford said that half of all retailers are not expecting to meet sales targets in the current quarter, with 30% saying they are not confident in surviving the next 12 months.
“The first two and a half months of 2023 have been incredibly tough for retailers,” Harford said. “Significant weather events, a downturn in consumer confidence, inflation being impacted by domestic factors like wage increases, supply chain, and supplier price increases – demonstrate the seriousness of the challenges faced by the sector.”
“New Zealand retailers employ more than 220,000 Kiwis, as the biggest employer in the country, with over 28,000 retailers operating to support communities with goods and services. Many are doing it tough and require settings that bring down the influences of domestic inflation, support operations through removal of undue regulatory costs and an economic environment that means kiwis can shop with their local retailer.”