Warmer weather, Christmas trading period offer glimpse of hope for stretched retailers

Retailers are hoping for better results over the next three months. Photo / Dean Purcell

Warmer weather, increased visitors and the lead up to Christmas offer a glimmer of hope for retailers who missed their sales targets in the September quarter.

According to a survey by Retail NZ, 57 per cent of retailers failed to hit their sales targets for the period ending September 30.

That, combined with a drop in consumer spending in September, is the third consecutive quarter where a significant number of retailers had failed to hit their targets, Retail NZ's general manager of public affairs Greg Harford said.

Sales across the retail sector for the September quarter were $21.9 billion, up 5.4 per cent on the same quarter of last year - a 0.1 per cent increase in seasonally adjusted terms.

Consumer spending has been constrained during the first nine months of the year, with economists attributing this to cooling house prices.

"There is more optimism for the current quarter with 75 per cent of retailers expecting to meet or exceed their sales targets through to the end of the year," Harford said.

The retail sector is "under significant and sustained pressure", according to the latest Retail Radar report.

Retailers are hoping for better results over the next three months, with 48 per cent of retailers expecting to meet their targets in the fourth quarter.

"On the positive front, as the weather improves around the country and the festive season approaches, three-quarters of retailers are expecting to hit their sales targets for the rest of the calendar year, although this is down from 92 per cent at the same time last year, reflecting the negative retail trading environment during 2017," Harford said.

The industry report said an increase in visitor numbers over the summer period would benefit retail, however, Amazon's entry into Australia and ongoing competition from foreign websites trading without paying tax, was an ongoing concern.

Forsyth Barr recently assessed the implications of Amazon launching in Australia and found the retailers most at risk to be selling commoditised products such as media, toys, and electronics.

"Amazon offers a new sales platform to help Kiwi retailers reach a global market. Success is based on either having a unique product or having the most competitive offer in terms of value, selection and convenience," the report said.

Online sales account for 7.4 per cent of core retail sales in New Zealand.