Retailers upbeat as electronic transactions show healthy sales bounce

Photo / Richard Robinson

Electronic transaction figures show a healthy bounce in retail sales for last month, which a retailers group says could carry through to Christmas.

Paymark figures show spending through its network last month was up 5.5 per cent from November last year, raising the prospect that retailers could have their best Christmas for three years. Paymark said a 5.6 per cent rise in the number of transactions during the month was also a good sign.

Retail Association chief executive John Albertson said Christmas sales looked as if they could be up 2 per cent to 3 per cent on last year as the impact of tax cuts was now being felt.

A warm early summer was also helping lift confidence. "While it's not great it's going to be enough to get us over the big hurdle. It's still damn tough out there but there's a sniff of consumer resurgence in spending."

Paymark chief executive Simon Tong said there were signs of a strong improvement but the impact of heavy discounting was not known.

"It's hard to tell how retailers are truly faring. What it doesn't show is what their margins are like."

During the past two years there had been a last-minute rush before Christmas and sales could be even stronger this year, given December 25 fell on a Saturday with a full week's trading in the run-up.

"Wednesday, Thursday and Friday are strong trading days anyway - whether it's enough to make a good Christmas is the key. It's been the trend over the last two years for people to leave their shopping until late."

The spending rise was seen across the economy with fewer sectors reporting falling annual sales and sectors such as vehicle repairs (12 per cent annual growth), supermarkets (up 10 per cent) and footwear (up 8 per cent) growing quickly last month.

But these rises were concentrated among outlets with lower average transaction size, said Tong.

"Some of the big-ticket retailers like appliance, electronic and recreational goods stores that typically see a big jump in sales ahead of Christmas are among those sectors still posting year-on-year declines in November or only modest annual growth."

Debit-card use was growing, while higher transaction-value credit card spending was only slightly above levels of last year. "It's good news for retailers in that it's cash into their bank overnight but on the flip side they're smaller transactions so they need a few more of them."

Paymark processes about 75 per cent of all electronic transactions

By region, the fastest-growing centres last month were Waikato, Palmerston North and South Canterbury, with year-on-year increases in value of 9.1 per cent, 7.6 per cent and 8.0 per cent respectively.

Spending in Auckland and Northland was up 6.7 per cent.

Clothing retailer Hallenstein Glasson Holdings said yesterday that demand had tightened.

Chairman Warren Bell told the annual meeting the first two months of the 2011 financial year, starting August 2, had 5 per cent growth.

But that improvement had fallen away so sales for August to November were now flat compared with last year.