Almost 43 per cent of retailers in New Zealand are unsure whether they will survive the next 12 months as slow sales, low consumer confidence and rising costs impact the market.
This is according to Retail NZ’s quarterly Retail Radar report and survey of its members, which shows that the 43 per cent of retailers uncertain of survival is a substantial jump from 32 per cent in the previous quarter.
In the same quarter of 2023, 36 per cent of retailers were not confident about whether they would continue to trade.
“Pessimism about trading conditions has definitely deepened in the last few months,” Retail NZ CEO Carolyn Young said. “This is traditionally the quietest time of the year for retailers but they are really struggling for sales right now.”
Some retailers were worried about how they would pay for next season’s stock when current sales were not enough to cover costs.
Over 70 per cent of retailers reported that they did not meet sales targets for the quarter – even though targets are lower at that time of year. This was a significant increase from the 64 per cent who failed to meet their targets in the first quarter of the year.
“Worryingly, most retailers are not expecting trading conditions to improve through the July-September quarter, with only 2 per cent saying they expect to exceed their targets,” Young said.
Despite the tough trading conditions, many retailers continue to seek staff with good skills in sales and service. But training new staff is difficult when businesses are not seeing many customers.
Almost half (48 per cent) the respondents’ businesses were fully staffed but 25 per cent had not replaced departing staff, and 5 per cent had to make staff redundant during the quarter.
“Retail NZ is very concerned for the 8 per cent of retailers who said the lack of staff was impacting their ability to take rostered days off. This raises fears over their mental and physical wellbeing,” Young said.
Looking ahead, a number of respondents plan to recruit for the summer season but are waiting for trade to pick up before they can afford to do so.
Inflation/cost-of-living was cited by the majority of retailers (79 per cent) as the biggest issue for their business. However, last week’s Consumers Price Index gives some hope of a light at the end of the tunnel, Young said.
“Summer still feels a long way off but I’m confident we are seeing the first signs of the economy warming up,” she said. “We are getting nearer to the Reserve Bank’s target range for inflation of 1-3%, indicating that a cut in the Official Cash Rate is closer than previously expected.
“This will lead to a turnaround in consumer confidence and a greater willingness to support local retail businesses.”
In spite of the challenging times, it’s important to note that some retailers are still doing well, Young said.
“There are some bright spots across the sector, with some of our members trading strongly. Five percent of Retail Radar respondents said they exceeded their targets for the quarter and 57 per cent are confident they will survive into 2025.”