Beleaguered retailers across New Zealand are feeling more confident about their future, according to the latest Retail Radar quarterly survey of Retail NZ members.
This is despite a large portion of retailers expecting revenue losses in the fourth and final quarter of the year.
Retail NZ’s quarterly ‘temperature check’ shows a noteworthy uplift in confidence, with 65 per cent confident or very confident that their retail business will survive the next 12 months, compared to just 58 per cent last quarter and 57 per cent this time last year.
As the busy Christmas sales season approaches, retailers are expecting improvements in trading conditions. The survey found that a high percentage of respondents (57 per cent) think they will meet or exceed their targets in Q4 (October-December) compared to its last Retail Radar survey, when only 32 per cent thought they would meet or exceed targets in Q3 (July-September).
“The fourth quarter is critical for retailers with key sales periods including the Labour Weekend sales, Black Friday sales and Christmas promotions,” Retail NZ CEO Carolyn Young said. “Many retailers rely heavily on strong sales during this period to ensure they have a buffer for quieter months. So it’s encouraging to see that a significant number of retailers are expecting buoyant Christmas sales.
“Unfortunately, the remaining 43 per cent don’t think they will meet their targets for Q4.”
The Retail Radar results mirror the findings of other recent business sector surveys such as NZIER’s Quarterly Survey of Business Opinion and the New Zealand Herald’s Mood of the Boardroom.
The growth in confidence for retailers comes after poor sales in Q3, when 70 per cent of survey respondents did not meet their sales targets.
“Retailers are responding to green shoots in the economy, such as the recent falls in both the OCR and annual inflation, with a surprising rise in confidence. Optimism is the key word, yet sales data has still been weak,” Young said.
Inflation/cost of living is still the main issue impacting retailers, but concern is declining with a drop from 80 per cent in Q2 to 75 per cent in the latest survey.
Rising insurance costs are continuing to have a big impact on business. However, concern over this has also fallen slightly with a drop to 53 per cent - down from 55 per cent in both Q1 and Q2 of 2024.
Anxiety over freight costs has increased, rising to 46 per cent from 40 per cent in the previous two quarters. This concern is ahead of cost of payments/merchant fees which are still in fourth place on the list of concerns at 45.2 per cent, down from 44 per cent last quarter.
On the first anniversary of the 2023 Parliamentary elections, Retail Radar also asked how the Coalition Government had performed for the retail sector.
Results show that the jury is out, with almost equal numbers saying the Government has performed poorly or performed well, while over 40 per cent are neutral.
“Signs that the economy is starting to turn the corner is giving retailers hope for the future,” Young said. “We look forward to seeing a turnaround in consumer confidence and a greater willingness to support local retail businesses. It will be critical to see these changes in the final quarter of the year.”