Retailer confidence improves, sales bounce back in June - but overall sales for quarter down 16%

'Pent up demand' partly credited for increase in retail sales in June. Photo / 123RF

Retail sales in June were 34 per cent ahead of spending recorded in the same month a year earlier, but while this is encouraging, total sales for the quarter were down 16 per cent.

The latest Retail Radar report shows that the increase in sales last month were the result of "strong pent-up" demand from consumers accessing goods and services they were unable to purchase during lockdown.

While the June results were more positive than expected, as the report outlined, total spending over the past four months remain below last year's levels.

Sales were down less than 10 per cent in March, 80 per cent in April and about 10 per cent in May.

Retail NZ chief executive Greg Harford said there had been a significant change in retailer sentiment, with 73 per cent of retailers now saying they were confident the business would survive over the next 12 months, compared to just 39 per cent in the previous survey.

"The last few months have been extraordinarily challenging for the retail sector, and although sales over the last few months have not recovered completely, it is good news that we have seen a significant uplift in spending during June," Harford said.

He said the increase in spending in June could also be attributed to New Zealanders not being able to travel internationally and instead "undertaking projects at home".

Harford warned that the encouraging signs in the sector would likely be short-lived as more jobs become at risk once the government wage subsidy ends in September and mortgage holidays come to an end.

The report forecast a net loss of about 6000 jobs from the sector within the months ahead.

It also outlined that retailers were facing supply chain challenges, with 41 per cent of retailers saying that they were facing difficulties sourcing stock due to reduced production overseas and freight challenges.

"There are delays getting stock into New Zealand, and in some cases retailers are looking for alternative sources of product," Harford said.

Strong sales had been reported in multiple categories across the sector in June, but the report outlined that the gains were not consistent across all retailers, including those in the same category.

About 28 per cent of retailers said their sales fell in June compared to last year and 57 per cent reported an increase.

The average decline was 17.6 per cent in the month, while the average increase was 15.8 per cent.

E-commerce transactions were up 60 per cent in June, but the average transaction value was down 18 per cent, the report outlined.

Other findings in the report show that 17 per cent of retailers were unable to negotiate rent relief and 84 per cent of retailers believed there should be no further increase to the minimum wage in April.