Foot traffic in key shopping areas has recovered following weeks of little to no visitors. Photo / Alex Burton
Foot traffic in key shopping areas has recovered following weeks of little to no visitors. Photo / Alex Burton
The uptake in online shopping exploded during lockdown as New Zealanders were forced to shop digitally during the pandemic.
But the convenience it afforded many during lockdown has become a driving factor in why a large chunk of New Zealand consumers are choosing to continue to shop online, with Kiwisincreasingly swapping the shops for e-commerce.
Online sales accounted for about 9 per cent of all retail sales in New Zealand prior to the Covid-19 pandemic hitting home in March.
In just a matter of months that proportion of spending conducted online has almost doubled - and Retail NZ believes the initial surge in e-commerce sales has come down and settled at a rate of about 20 per cent.
By March 26, when New Zealand went into full lockdown, online visitors to its site had dropped to its lowest point, reflecting the drop in spending intentions.
From April 12 onwards, when online shopping for essential goods opened up, PriceSpy visitor numbers surged, with the number of online visitors exceeding total visitor numbers on the previous year.
When the reported numbers of Covid-19 cases consistently stayed at zero, from May 23, consumer confidence changed with shoppers optimistic, PriceSpy NZ country manager Liisa Matinvesi-Bassett said.
"Despite the current economic climate, our historical click insights for May indicate consumer shopping habits have substantially changed because of Covid-19," Matinvesi-Bassett told the Herald.
"The virus obviously had a massive impact on how people shopped, as at first, consumers could no longer go into a store, so needed to use online shopping ... However, as we gradually dropped down alert levels, consumers still continued to shop online and visitor numbers gradually increased - perhaps because they still felt safer to continue shopping online rather than heading instore."
Retail NZ chief executive Greg Harford said the biggest change Covid-19 had brought about within retailing was the mainstream shift to online spending.
"We are now spending more online and more through digital channels than we were pre-Covid," Harford told the Herald.
"People have become more attuned to shopping online over the last couple of months."
Harford said the pandemic had also brought about "value-seeking behaviour" whereby consumers were now seeking significant discounts and increasingly swapping designer goods for unbranded cheaper alternatives.
"People are nervous about spending, and they are looking for downgrades, moving away from luxury brands, and to more basic things where they can get better value for money."
While the number of people out, about and spending had not decreased, and in some instances increased, Harford said people were spending significantly less than they were pre-Covid-19.
During alert level 4, shoppers and options was constrained. All retail stores were closed except for the major supermarkets and dairies. But the spending trends during that time were shoppers were spending more all at once.
Once non-essential non-food products were permitted for sale, more spending occurred but consumers remained cautious about spending on goods outside of the essentials, he said.
In alert level 3, shoppers remained cautious about spending up large on discretionary goods, Harford said, and spending was down significantly as stores remained closed.
Once New Zealand moved to alert level 2, shops, malls and hospitality venues were permitted to reopen; that brought "a bit of a boom in sales" as consumers were buying things they were unable to get.
During that time there was good consumer appetite bought on by "pent-up demand" and consumers flocked to home improvement, garden and homewares stores, perhaps reflecting changing wants and inspiration to change their living environments.
Retailers of these categories experienced record sale days.
While level 1 brought a surge in sales, it was not a rosy picture for retailing as retailers desperately tried to recover from the financial position of having no revenue during the past eight weeks.
Chris Wilkinson, managing director of First Retail Group. Photo / Mark Mitchell
Today, sales are still down on monthly averages, but the majority of New Zealand consumers were enjoying spending again albeit not to the levels they were previously. Many consumers are spending money that they typically would have spent on an international holiday at this time of the year.
Harford said some businesses were experiencing a rosy period while others were struggling to survive.
Climbing new Covid-19 cases and how well those were handled by the Government would determine how much of a dent consumer confidence would take over the next three to six months, he said.
"We are looking at quite a recessionary trough that will lead to lots of consumers having household incomes reduced through unemployment or a cut back in hours and that will translate through to what people are spending in the shops, and further decline in consumer confidence."
Retail analyst Chris Wilkinson said Covid-19 had brought many "later adopters" to the online shopping party and reminded others why they liked shopping online.
"We anticipate more consumers will blend their relationships with retailers between online and instore as shoppers become increasingly confident with digital channels," Wilkinson said.
"Supply challenges will have definitely impacted some goodwill, however, volume was such that it's meant so many more businesses were pressed into improving presence and performance. It's also accelerated some fairly major investments by retailers and freight companies in new facilities."
