Confidence among New Zealand retailers has grown in the fourth quarter, with seven in ten of them (70 per cent) expecting to survive 2025.
This is according to the latest Retail NZ Retail Radar survey, which showed that the latest confidence number is up from 65 per cent in the the third quarter (July-September) last year.
Retail NZ chief executive Carolyn Young said this continued positivity could be due to inflation staying steady at 2.2 per cent for the last two quarters, as well as the prospect of further Official Cash Rate cuts and the Government’s intention to make economic growth its top priority this year.
However, she added that most retailers are cautious on sales in the first quarter of the year with only 3 per cent expecting to exceed their sales targets.
“Improved consumer confidence is vital to retail sales,” Young said. “Until consumers feel confident about their job prospects, ongoing stable levels of inflation and interest rates easing, they will continue to be cautious about discretionary spending.”
For the month of January this year, ANZ-Roy Morgan Consumer Confidence was down 4.2 points to 96.0, with falls across most questions.
The most relevant question for retailers is whether people think it’s a good time to buy a major household item. ANZ and Roy Morgan data showed that this dipped in January both amongst people with mortgages, and those without.
“The indicator is well off its lows and likely still trending higher, but this month’s fall is a reminder that the environment for retailers is likely to remain patchy and challenging for some time yet,” ANZ and Roy Morgan reported.
Retailers’ improved confidence levels are despite Stats NZ reporting that total retail sales were down 1 per cent – and spend down NZ$80,402,000 – in December 2024 compared to December 2023.
In the Retail Radar for Q3 2024, 57 per cent of retailers had predicted they would meet or exceed their targets in Q4. The actual results for Q4 are a game of two halves, Retail NZ noted, with only 45 per cent meeting their targets, but 17 per cent of retailers exceeding targets, well ahead of the 5 per cent who expected to.
Continuing the trend of the last 12 months, inflation/cost of living (73 per cent) and insurance increases (53 per cent) are the key concerns for retailers. To succeed in 2025, 30 per cent of respondents said they needed to see improved consumer confidence, lower inflation (17 per cent), and merchant surcharge fee legislation (14 per cent).
“While they wait for that upturn, retailers are doing what they can to tread water,” Young said. “Some retailers are buying less or different stock to meet consumers’ changing needs, while others are looking to enhance their digital platforms to generate more online sales and some business owners are working more unpaid hours.
“However, some retailers are doing well. The key is remaining agile and ensuring their business meets the current market environment, as well as looking at how to reduce costs.”