Christmas rush lifts spending - but only a little

Sylvia Park Christmas shoppers. Photo / Herald on Sunday

The Christmas rush pushed retail spending up 3.9 per cent for December but 1 per cent of that was because of price rises from the GST increase in October, figures from electronic transactions processor Paymark show.

The rate was lower than for November but higher than the 10-month average of 2.8 per cent.

Paymark head of sales and marketing Paul Whiston said despite the increase in spending at the beginning of December, the numbers showed modest growth across the general retail sector.

"After taking petrol and supermarkets out for the month of December, we see that spending on more discretionary items rose by 2.7 per cent year-on-year. Earlier in the year this measure of spending was only rising at a rate of 0.8 per cent per annum," he said.

"During December, people have been increasing their spend on takeaways, up 24 per cent, general food and liquor, up 7 per cent, and restaurants and cafes, also up 7 per cent."

Spending was up by 6 per cent for retailers in South Canterbury and Gisborne and up 5 per cent in Waikato. But spending was down for the West Coast by 2 per cent.

Paymark's network processed 878 million transactions last year - 2.4 million per day. The volume of transactions was up 4.4 per cent on 2009.

"While the increase in activity towards the back-end of 2010 would have been an encouraging way for retailers to end the year, the situation remains one where the near-term should be approached with caution."

The New Zealand Retailers Association chief executive John Alberton said the real growth for December (minus the GST increase) was 2.5 per cent - "in line with what we thought".

"What we have had is a market that has been very tough; 2.5 per cent growth is pretty flat but at least it's on the positive side of the ledger."

Alberton said a significant amount of discounting and promotion went in to achieve the 2.5 per cent increase.

"The biggest concern going forward is margin," he said. "November was positive. December was positive, so I think we are heading in the right direction and that's important."

Alberton said the growth had been patchy - it came down to who had the offer on the table when the customer was ready to buy.

"The variability [between retailers] is still huge; while we are talking 2.5 per cent average, there will be stores that have done much better and some that have done much poorer. Overall it has been a mixed bag but at least in total we have come out the other side."

Paymark processes 75 per cent of New Zealand's electronic transactions.