Covid-19 may have made consumers more mindful of where they are spending their money but the initial draw towards shopping local may not last.

Initial consumer sentiment reports found that consumers were feeling more connected to - and inclined to spend - with local businesses but, as the country continues with few restrictions after the mandatory lockdown, price is again increasingly a determining factor in purchasing decisions.

This is expected to become more of an influencing factor as fears around mass job losses and employment uncertainty weigh in, encouraging people to tighten their purse strings.

Ernst & Young's (EY) latest Future Consumer Index report has found that despite changed perceptions by consumers, accelerated by the pandemic, only three in every 10 consumers rank locally sourced as important when making a purchasing decision.


The intention to support local remains high, but 65 per cent of the approximately 500 New Zealanders surveyed said they remained cautious about spending in the long term.

Two-thirds acknowledged that price had become "more important" in the last month.

"Price point is one [factor] that has definitely raised its head as more important to the consumer than it was a month ago," retail expert Rich MacFarlane, partner at advisory firm EY, told the Herald.

"Health was the number one concern. Now we've got a more thoughtful consumer, thinking about where they are going to spend their money and price is definitely a factor."

A trend towards the desire to shop local and support New Zealand businesses to play a part in the country's economic recovery was noted in the index findings, with 55 per cent of people saying it was more important today relative to a month ago.

The index is conducted each month to analyse the pulse of the economy.

"One in three [people] rank locally sourced as very important but when you brought in the people that actually felt it was an important distinction, then that jumped up to 86 per cent," MacFarlane said.

"There was a shift that was there before Covid and now it has been accelerated. There is uncertainty in the market but ... New Zealanders, compared to our neighbours, are more positive on the economic recovery and personal finances into the future."


Six in 10 people surveyed considered price more important than it was a month ago, this reflected many now "considering how they spend" more than they used to, MacFarlane said.

"When it comes to handing over that dollar at the moment there's definitely an extra level of thought going on with the New Zealand consumer.

"What's going to change it? There's already a trend that people are feeling more positive about the economic recovery, so if that consumer confidence can [continue], if we can encourage that spending and see those measures back on track, if we know that when we go down the road - should there be another outbreak, that health and safety measures and that enforcement of protections and people are safe from Covid are in place, then we'll see confidence come back and a willingness to spend."

The index found that two-thirds of people intended to support domestic brands versus international brands and that Gen X consumers had undergone a shift in mindset with almost two-thirds now saying they would likely shop local compared to one month ago.

Rich MacFarlane, EY partner. Photo / Supplied
Rich MacFarlane, EY partner. Photo / Supplied

Consumer confidence bounced in June with the number of optimists outweighing pessimists but it remains well below the historical average, the latest ANZ Roy Morgan Consumer Confidence Index found.

ANZ chief economist Sharon Zollner last month said the bounce was "encouraging" but with unemployment set to spike, consumer confidence was not likely to improve.


With the wage subsidy and lower interest rates counteracting job losses and with no further wage subsidy extension available, predicted further mass job losses in the months ahead are expected to further dent confidence and limit spending.

Data from the Ministry of Business, Innovation and Employment's Consumer Spending Dashboard shows home and recreational retailing and spending on food, liquor and repair services in June was up more than 9 per cent.

Spending on home and recreational retailing was up 18 per cent in June compared to the same month a year earlier, while spending on dining out was down more than 9 per cent and clothing, footwear and department stores down 0.6 per cent in the month.

The highest decrease in spending of all 12 categories was at transport and travel agencies - down 79 per cent in June.