More Northland businesses go into receivership amid recession and cost of living crisis

The recession, rising costs and a lack of foot traffic have already forced a number of businesses in Whangārei CBD to shut their doors.

The number of company insolvencies in Northland jumped almost eightfold in March from the same time the previous year, leaving businesses calling for administrators to step in.

It comes as the recession and cost of living crisis continues to hit home for an increasing number of struggling Northland businesses.

Figures from the Ministry of Business, Innovation and Employment (MBIE) show the number of company insolvencies with a Northland registered office post code was three in March 2023. That jumped to 23 company insolvencies this March.

Affected sectors include civil engineering, construction and trades, pharmaceutical preparation, cleaning and horticultural services, agricultural research and medical general practice.

MBIE Business Registries national manager Bolen Ng said of the 23 insolvencies, 13 companies were operating under the umbrella of the same holding company.

“At this stage, all these related companies have entered into voluntary administration rather than receivership or liquidation,” Ng said.

Of the other 10 businesses, another three went into voluntary administration, six went into liquidation, and one into receivership.

Voluntary administration is when an administrator is appointed to review and rearrange a business to avoid liquidation, and receivership is when a receiver is appointed by a secured creditor to deal with the secured assets.

Liquidation is when a liquidator takes control of a business and its financial affairs to repay debts to creditors.

Northland Chamber of Commerce chief executive Darryn Fisher said the cost of living crisis was “100 per cent” still having an effect.

Northland Chamber of Commerce chief executive Darryn Fisher said the cost of living crisis was still having a huge effect on local businesses.

About half a dozen members had chosen to “close up shop or sell, get out of the industry or move overseas”, he said.

“Whether it’s fatigue or they’ve had enough ... there’s lots of reasons. It’s definitely tough out there, and it’s going to continue to be for the next six months.

“Business confidence is probably the lowest I’ve ever seen it. Expect to keep seeing these sorts of numbers.”

A Retail NZ quarterly report released on April 23 indicated 64 per cent of New Zealand retailers didn’t meet sales targets in the first quarter of the year.

Almost a third are unsure whether their business will survive in the next 12 months, the report said.

Loftie Lifestyle Store, Christian bookstore Manna and beauty service Laser Clinics NZ Whangārei have all recently closed.

Gift shop Beautiful Things is due to close, while Trade Aid Whangārei in the Strand Shopping Centre is closing in June as part of a nationwide move to take the business completely online.

Whangārei-based business consultant Susan Cooney, from Oxygen8 Business Consulting, said businesses should “think about where they want to go”.

Whangārei business consultant Susan Cooney said businesses should "take stock" of what has worked and what needs to be improved.

“For some, it means doing a review and really taking stock of what’s worked and what hasn’t, and what needs to be improved.

“After being in business for some time, they forget what they do best, and it’s about looking at that and going back to basics.”

Cooney said employees also need support, as “they’re getting scared as well”.

She suggested including employees in decision-making “so they feel part of what’s going on” and watching for signs of burnout among staff members.

“Work on company culture and wellbeing and what can we do to support each other.

“We have to take care of ourselves, which means taking care of each other as well.”

Fisher’s advice is to “keep engaging with [entities] like the Chamber, because you’ll feel you’re not alone”.

“The worst thing you can do is put your head in the sand and go it alone.

“Stay connected to your community and like-minded business owners for support.”

The recession, rising costs and a lack of foot traffic have already forced a number of businesses in Whangārei CBD to shut their doors.

During the height of the Covid-19 pandemic between March 2020 and February 2022, 43 Northland businesses had liquidators appointed.

Retail NZ chief executive Carolyn Young said it was a “super-tough” time for retailers.

Retail NZ chief executive Carolyn Young said it was a "super-tough" time for retailers. Photo / Jason Dorday

“It’s a reflection of the economic climate.

“We had a soft summer, and if you’ve had a downturn in sales and your margins have been impacted with increasing costs, insurance, freight and inflation ... your margins are getting tighter all the time.

“They’re [businesses] battling the lack of confidence from consumers who are unsure about their jobs and are not spending on discretionary items.

“It’s going to be a really tough year.”

Nearly 60 per cent of respondents surveyed said their insurance costs had increased “significantly” in the past year.

With council rates and other costs also rising, some retailers reported they were considering cancelling their policies.

“As we enter the traditionally slower winter months, retailers will be tightening their belts in anticipation of slow sales and uncertainty,” Young said.

“Retail NZ is hoping the upcoming [May 30] Budget will help restore confidence to the marketplace and provide a pathway out of recession.”

Jenny Ling is a news reporter and features writer for the Northern Advocate. She has a special interest in covering roading, lifestyle, business, and animal welfare issues.