The latest Retail Trade Survey shows retail spending fell by 0.1% in the September quarter. Photo / Michael Craig
The best is yet to come for the retail industry, as Stats NZ’s latest Retail Trade Survey shows retail spending has again declined during the September quarter.
The total volume of seasonally adjusted retail sales dropped 0.1% in the September quarter compared with the June quarter, remaining at $24 billion.
Unfortunately for the industry, this is the ninth consecutive quarter to see a drop.
Ten of the 15 industries measured had lower seasonally adjusted sales volumes in the September quarter compared with June.
However, it was good news for motor vehicle and parts retailing, which reported a sales volume increase of 4.3%.
Electrical and electronic goods retailing also reported a positive increase, up 4.6%.
The largest contributors to the fall in retail activity were supermarket and grocery stores, down 1.3%, and food and beverage services, down 2.1%.
Department stores also reported a decline, down by 2.5%.
Westpac senior economist Satish Ranchhod said there has been particular softness in discretionary spending.
“Looking at the longer-term trends in the retail sector, sales have been trending down over the past year as households have wound back their spending in response to increases in living costs and high interest rates,” Ranchhod said.
“We expect to see retail spending gradually pushing higher as we go into the holiday shopping season, with a more meaningful rise expected through mid-2025.”
Retail NZ chief executive Carolyn Young said last year was really difficult, but now the industry is in “a world of hurt”.
“The sense was that inflation was getting under control; it was pretty clear that the economic factors were starting to turn,” Young said.
“It’s too early for the consumers to start spending and getting their wallet out of their pocket.”
She emphasised that unemployment is starting to hit smaller regions of New Zealand, and how it’s likely to impact the businesses in those communities.
As for the businesses trying to “Survive to ‘25″, she expects further imminent cuts to the OCR to help but believes it will take until the end of the first quarter of next year for things to truly turn around.
Young said it’s necessary to consider “all the pieces of the puzzle” which will reveal the bigger picture, with consumer confidence tightly linked to whether the sector will bounce back.
“The turnaround in the economy can’t come soon enough for the retail sector.”
As for the total values of seasonally adjusted sales, 10 of the 15 industries reported lower numbers than the June quarter, down by 0.7%.
Motor vehicle and parts retailing grew by 3.3% or $124 million, but fuel retailing reported a significant drop, down by 6.1% ($150m) in the quarter.
ANZ chief economist Sharon Zollner said that the downward trend that has been in place since late 2021 looks to be finally arresting.
“While the tailwind from lower interest rates is expected to support a recovery in retail sales moving forward, it won’t be instant,” Zollner said.
“There are still plenty of headwinds facing the recovery, with labour market conditions likely to continue to deteriorate into the middle of next year, weighing on household confidence.”
She expects Q3 to mark the bottom of the cycle, with a meaningful recovery in retail spending unlikely until 2025.
Regionally, only one of the 16 regions reported higher seasonally adjusted sales values in the September quarter compared with June.
Taranaki was the region, which reported an increase in adjusted sales values by 1.7% for the quarter.
The largest declines were in Nelson and the West Coast, down 4.7% and 4% respectively.
In the main centres, Auckland’s adjusted sales values fell by 0.9% ($103m), Wellington by 1.3% ($35m), Canterbury by 0.8% ($30m) and Waikato fell by 1% ($27m).
The value of stock held also fell year on year, down by 1.9% or $177m compared to September 30, 2023.
Tom Raynel is a multimedia business journalist for the Herald, covering small business and retail.