The spending mirage
Retail NZ chief executive Carolyn Young has a word for the March 2025 card spending data: a mirage. The headline number showed 0.5 percent growth. Strip out a 33 percent surge at petrol stations and core retail spending actually fell 1.2 percent year-on-year. With 93 percent of NZ freight moving by road, fuel price spikes ripple through every supply chain, inflating the headline while draining wallets that might otherwise visit a shop.
ANZ card data for April 2025 confirms the picture: overall spending fell 0.1 percent month-on-month on a seasonally adjusted three-month average, and sits 0.2 percent below year-ago levels. Apparel is the standout casualty. No clothing store category has recovered to January 2023 spending levels. Childrenswear and tailors are doing particularly badly.
RBNZ consumption data shows the March 2025 quarter at $30,591 million seasonally adjusted, up 1.5 percent on the quarter but a thin 1.4 percent year-on-year. The September 2024 quarter contracted 2.8 percent annually. The recovery, such as it is, remains fragile.
Where the money went
The consumer spending has not vanished. It has been redirected offshore.
Spending on local clothing fell approximately 8.4 percent in the past year versus 2023. The timing is not coincidental. NZ Post e-commerce data shows New Zealanders spent more than $6 billion online last year, up 5 percent, but the growth was captured almost entirely by offshore platforms. Online department and variety stores, the Temu category, saw a 33 percent jump in purchases in 2024 versus 2023.
Temu is now rated by 17 percent of New Zealanders as the online retailer they use most. Infometrics chief forecaster Gareth Kiernan recorded a 20 percent increase in direct household imports of low-value goods, calling it the single biggest driver of consumer spending growth. His assessment was blunt: “Unfortunately, it’s of no benefit to New Zealand businesses whatsoever, and is in fact a negative for the broader retail sector as more of the consumer spend gets siphoned offshore.”
Not a tariff problem, a rules problem
This is where the debate gets misframed. Temu does collect and remit GST on NZ sales, a requirement since 2023. The issue is not zero tax. It is the full weight of obligations that fall asymmetrically on domestic operators.
Chris Wilkinson, managing director of First Retail Group, put it directly: “In many cases their products are being supplied directly from the manufacturers, so it creates, in some ways, an unfair playing field because the New Zealand retailers are going through the likes of quality and sourcing standards.”
Until the new levy came into effect, Customs processing costs for the flood of low-value parcels were absorbed by taxpayers. Each individual parcel was small enough to pass under the threshold with minimal scrutiny, but the cumulative processing cost was substantial, and the platforms generating it were not paying for it. Local retailers, meanwhile, carry NZ commercial leases, NZ wages, and full product safety compliance.
Wilkinson noted the human cost too: “While some will be novelty purchases, others are becoming solutions such as mums turning to even cheaper solutions for infant clothing. Each transaction, though, is money lost to the economy.”
$2.21 is a rounding error
The government’s response, a $2.21 per-parcel levy on commercial goods under $1,000, came into effect in 2026. Wilkinson describes it as cost-recovery, not protectionism: it recoups processing costs previously borne by taxpayers.
That framing matters. The government has been careful to position this as closing a subsidy loophole rather than shielding domestic retailers from competition. But $2.21 on a $15 parcel does not equalise product safety obligations, compliance costs, or the wage bill differential. Inside Retail NZ documented 61 store closures announced in early January 2026 alone, identifying a “disappointment gap” where retailers who hired staff and took on leases in anticipation of a post-Covid recovery have been left exposed on thin margins.
Industry groups are calling for measures similar to South Africa and France, where levies and regulatory steps go further toward levelling the playing field.
This is not about protectionism
The centre-right case here is not “protect local retailers from competition.” It is tax neutrality. A system where domestic operators collect GST, pay NZ wages, comply with product safety law, and carry the full weight of commercial regulation, while offshore competitors operate under structurally lighter obligations, is not free-market competition. It is regulatory distortion.
Young warned the situation could deteriorate further: “Just at a time when we thought we were coming out the other side.” The $2.21 levy is a start, but the question for policymakers is straightforward. If the rules are supposed to apply equally, why don’t they?
Sources
- RNZ: Spending data worse than it appears, Retail NZ says (2025-04-14)
- ANZ NZ Card Spending Chartpack – April 2025 (2025-05-09)
- NZCity: Local clothing stores appear to be bearing the brunt of cheaper foreign websites
- RNZ: Off-shore online stores, Temu, Shein, ‘significant worry’ for NZ retailers
- RNZ: Temu, Amazon and AliExpress cash in as local shops do it tough
- Newsroom: Too much Temu – New customs levy ends taxpayer subsidy for cheap parcels (2026-03-06)
- Newstalk ZB: Temu tax levy on low-value commercial imports comes into effect
- Inside Retail NZ: Liquidations, rents and the ‘disappointment gap’ holding back Kiwi retail (2026-01-29)