Kiwis stay away from the malls, record fall in retail stats

Stats released this morning show a record fall in retail sales for the March quarter - down nearly 3pc

Retail sales plunged in the first three months of the year and the hard times are expected to continue for retailers.

Figures published today by Statistics New Zealand (SNZ) show the seasonally adjusted volume of total retail sales fell a record 2.9 per cent in the March quarter.

For the sixth quarter in succession motor vehicles were the biggest contributor to the fall in sales volumes, with an 11.4 per cent or $238 million drop, SNZ said.

Volumes in core retailing, which excludes the four vehicle-related industries, fell a seasonally adjusted record 1.2 per cent, or $124m in the March quarter from the previous three months.

The biggest falls were in appliances, down 5.9 per cent or $83m, department stores down 3.6 per cent or $35m, clothing and softgoods down 3.1 per cent or $19m, and accommodation, down 3.9 per cent or $18m.

Westpac research economist Dominick Stephens said the big question was how much further retail sales would fall and when would they recover.

During the past month or so the housing market had picked up, consumer confidence had improved, international economic news had been about "green shoots of recovery", and the higher New Zealand dollar had kept a lid on the price of imports.

But no glimmer of that relatively positive news was reflected in the monthly retail figures for March, Stephens said.

SNZ reported that for just the month of March, seasonally adjusted retail sales fell 0.4 per cent or $22m compared to February. The decline was driven by a 7.4 per cent or $41m fall in fuel retailing, coinciding with small falls in petrol and diesel prices.
Sales in core retailing rose a seasonally adjusted 0.5 per cent or $20m in the month, with the biggest rise being in cafes and restaurants which lifted 4.4 per cent or $14m.

Stephens said it seemed increasingly likely that most of the cash from tax cuts and lower interest rates would be saved rather than spent.

The high consumer spending from 2002 to 2007 had been unsupportable by New Zealand's national income, and a long overdue correction to a more sustainable level of spending, financed by income rather than debt, was under way.

On a per-person inflation-adjusted basis New Zealanders were now spending 8.8 per cent less than they were two years ago, said Stephens.

"But with the current account balance still grossly in deficit, the transition from unsustainable to sustainable levels of spending still has a way to run.

"There are more hard times ahead for retailers. The silver lining is that lifting national savings by spending less is likely to please the ratings agencies."

- NZPA