Retail NZ wants a levy on shoppers using Temu and Shein to support local retailers. Photo / Getty Images
By Susan Edmunds of RNZ
Would you pay a tax on Temu to help support local retail?
New Zealand’s clothing retail sector has been hit particularly hard by a downturn in spending, economists say – and the organisation representing retailers wants a levy imposed on people shopping at retailers such as Temu and Shein.
ANZ chief economist Sharon Zollner said the past few years had been “brutal” for clothing retail.
Its latest card spending data showed that apparel spending lifted at about half the rate of total spending over the past 10 years, and had softened notably from a peak in 2022.
As a subset, children and babywear shops were still experiencing activity near 2016 levels.
Zollner said it was possibly because people had shifted their shopping to online retail giant Temu, or other general retailers for whom the apparel component could be split out.
“Bricks and mortar clothing retail – and for that matter their online offerings – could be losing market share, as well as people spending less on clothing.
“Clothing is one of those things where you can make do with what you’ve got for longer if you are watching your pennies, and it’s notable that until the last month, second-hand stores have been doing very well – and I’m sure a very big chunk of that is clothing.
“Clothing is obviously a necessity but there’s a lot of flexibility in how much you choose to spend on it and when, so I’d say it’s been behaving more like a discretionary item through this cycle.”
Westpac senior economist Satish Ranchhod agreed a change had happened.
“Retail spending on apparel has been tracking flat for quite an extended period. Past the pandemic, we haven’t seen much growth over the last couple of years.”
He said more affordable consumer goods had been affected by the changes in e-commerce.
“If you think about fast fashion, you know, a lot of that stuff, you can bring it in cheaply from offshore, and our local retailers are competing with these big overseas-based or online-based retailers, including things like Temu and AliExpress.”
Carolyn Young, chief executive at Retail NZ, said New Zealand could look at what France and South Africa had done, as models of how a tax or levy could be applied to help local retail.
France is implementing an environmental fee on ultra-fast fashion brands, which will rise to €10 ($20) per item by 2030.
“When you think about a business in New Zealand, they pay New Zealand staffing rates. They comply with the health and safety regulations in New Zealand and their products do as well.
“They have to comply to the Fair Trading Act and the Consumer Guarantees Act. There’s always costs involved in those areas. And anything you get in from offshore, you have no idea what their labour environment is like or what they’re paying their people. The product doesn’t have to meet any health and safety standards and they’re not compliant with New Zealand regulations around fair trading and consumer guarantees.”
She said the Government should impose stronger measures to help level the playing field, such as a levy paid by shoppers.
“If you were buying from offshore, what we would want to see is that there would be a levy that would be applied to that, that would be at a level that would be some sort of equaliser between what New Zealand businesses have to do and comply with.
“Will everybody come back from shopping with them? I don’t know, but we have to try because that’s just going to make it much more difficult because as soon as you shop offshore, the money goes offshore.
“It doesn’t stay in New Zealand, doesn’t create jobs in New Zealand, doesn’t, you know, keep businesses open. And at some point, that’s going to really matter.”
She said if everyone would shop in New Zealand, it would help the economy significantly.
Green Party co-leader Chloe Swarbrick said she agreed there was a problem but the French experience had shown a levy could be an unwieldy way to address it.
Gareth Kiernan, chief forecaster at Infometrics, said it was interesting that the electronic card transactions painted a bleaker picture than the retail trade survey or GDP data on household consumption.
“Spending on durables and semi-durables tends to get put under pressure during a recession, because people tend to make what they have last longer … I expect the shift towards online retailing – both onshore and overseas retailers – might be skewing some of the numbers that we’re seeing.”
Stats NZ data showed the number of enterprises in the retail trade sector dropped from 29,244 in February 2023, to 29,094 in February 2024, 28,791 in February 2025 and 28,554 in February this year.
Other sectors that experienced declines over that time included agriculture, forestry and fishing, mining, manufacturing, wholesale trade, professional, scientific and technical services.
- RNZ