Photo Source: Andrea Piacquadio
New Zealand’s retailers are experiencing a rollercoaster ride. Small business owners, including Kath Cooper of Simply Kawakawa, are grappling with unpredictable sales. Kath Cooper, alongside economists and groups such as Retail NZ is witnessing the complex ways economic pressures are influencing holiday shopping choices.
A Struggle for Small Businesses
Kath Cooper, who sells Simply Kawakawa balms, recently noted a modest uptick in sales when she restocked shelves at a local shop. However, she observed that turnover remains lower than last year, reflecting changes in consumer behaviour.
“They might buy what they went in for but they aren’t adding one more thing, or something for themselves,” Cooper said.
The rise of discount platforms like Temu has added to the challenge, with shoppers increasingly turning to cheaper alternatives. “There are still people talking around me saying ‘yeah get that from Temu’ so I think it might be hard for [some places],” she added.
Cooper made her first price adjustments in two years this year, with increases ranging from $1 to $3 due to rising costs. She remains hopeful for a better year in 2024 but acknowledges the challenges ahead. Despite initial fears, the impact on sales has been minimal.
Economic Challenges Weighing on Retail
Recent economic data underscores a challenging environment for retailers. BNZ economist Mike Jones highlighted a 10 percent contraction in sales volumes over the past two-and-a-half years—the steepest decline since the 1990s.
Meanwhile, card spending dropped in November after modest gains in previous months, signalling weak demand.
“Despite cooling inflation, further falls in interest rates and income tax cuts, households are still hunkering down and exercising constraint amid rising job insecurity and slow wage growth,” ASB economists explained. However, they remain optimistic about a retail recovery by 2025.
Mixed Signals in Spending Patterns
Some data reveals encouraging signs despite these challenges. Spending during the first week of December increased by 4 percent year-on-year, according to Worldline NZ.
Similarly, Kiwibank reported a 4 percent rise in November spending volume, though the value of spending decreased by 2.5 percent.
Kiwibank economist Mary Jo Vergara attributed this shift to falling inflation and seasonal discounts. “People were spending less but getting more,” she noted, marking a reversal from previous years of high inflation. She also highlighted growing consumer interest in experiences such as dining, travel, and entertainment, which have seen a surge in spending.
Small Businesses Struggling, Advocates Call for Support
For many small businesses, 2024 has been the hardest year since the pandemic, according to Dane Ambler, executive director of Buy NZ Made.
“Our advice is to get behind small local artisan businesses and show them support this Christmas,” Ambler urged. He noted a growing preference for handmade gifts and local markets over mass-produced items.
The holiday season is critical for these businesses, with much of their income generated during this period. “If it’s quiet, they may struggle next year,” Ambler warned.
Retail NZ and Local Shopping Benefits
Retail NZ Chief Executive Carolyn Young expressed cautious optimism for the season. While Black Friday sales were consistent with last year, she noted that many consumers are shopping at lower price points. One retailer reported higher foot traffic but reduced average sale values.
Young emphasised the importance of supporting local businesses. “It will help kickstart the economy if you buy locally and shop at stores in NZ whether that’s online or in bricks and mortar,” she said. She also highlighted the stronger consumer protections available under New Zealand’s Consumer Guarantees Act, contrasting them with the risks of overseas purchases.
E-Commerce and Record Logistics
The holiday shopping rush is in full swing, with consumers increasingly turning to the internet for product research. While 85 percent of purchases are still made in physical stores, the surge in online browsing has created a major challenge for logistics providers.
NZ Post recently broke its delivery records, processing an astonishing 580,000 items on December 2 alone. While spending trends reflect caution, the resilience of New Zealand’s retail sector and its local businesses—remains a hopeful sign for the future.