The customer most retailers think of as safe, middle income, degree-educated, paying a mortgage and working full time, is now the face of financial stress in New Zealand.
The University of Otago’s 2025/26 Consumer Lifestyles survey, the eighth in a series running since 1979, classes 27% of respondents as financial strugglers, up from 16.5% in 2020. That makes them the largest of six segments. The typical struggler is 43, earns $51,000 to $75,000, and often holds a degree and a mortgage.
“It’s not perhaps what we picture as those that would be financially struggling,” lead researcher Associate Professor Leah Watkins of Otago Business School said.
For any business selling something people can live without, that is the headline that matters.
Half the market has stopped buying on impulse
The survey’s sharpest number for business is this: 48% of respondents said economic uncertainty stopped them making purchases they would otherwise have made, up from roughly 30% in 2020. Forty percent struggled to buy essentials, and 52% went without something to afford them.
The NZ Herald’s write-up of the same study shows more Kiwis actively hunting for the cheapest products. That is not a temporary belt-tightening. It is a learned habit, and habits outlast the conditions that created them.
The pessimism runs deeper than the wallet. Watkins said a large share of respondents expected the cost of living crisis to continue, and the number who believe they must leave New Zealand to get ahead was “significantly higher than it was in 2020”. Nearly half now think that. A consumer who is mentally halfway to Brisbane is not signing up for a kitchen renovation.
Rising incomes, shrinking headroom
On paper, households should be fine. Stats NZ found average disposable income rose 5.1% to $2,077.70 a week in the year to June 2025, ahead of housing cost growth of 4.4%.
The average hides the squeeze. In the same data, 40.6% of households said their income was not enough or only just enough. Among mortgage holders that rose 4.3 points to 38.9%. Average mortgage interest payments climbed 6.8% to $452.10 a week, and rent rose 9%.
Inflation is not helping. Annual CPI sat at 4.1% in the June 2026 quarter, high enough to keep grinding down real purchasing power for households whose pay rises are already spoken for by the bank.
Card data is flattering the till
This is where business owners can be misled. Westpac’s latest Retail Spending Pulse shows per-person card spending up 7.7% year on year. Sounds like a recovery. It mostly isn’t.
Fuel spending is up 28% while volumes fell, with insurance up 7% and utilities 5%. People are paying more for the same, or less. There are bright spots, with furnishings and dining out both up strongly, but the headline figure is substantially inflation dressed up as demand.
Retail NZ’s numbers tell the volume story. Core retail transactions fell 1.3% year on year in September. Chief executive Carolyn Young was blunt: “when Kiwis have to put more money towards putting petrol in the tank and their mortgage repayments, something else has to give.” She also flagged the election as adding to consumer caution.
Years in the making
None of this arrived overnight. In 2023, the Retirement Commission’s tracker found 54% of people felt a financial pinch, concentrated among younger, Māori and Pacific households. By August 2025, Treasury noted consumables spending had hit a record $2.8 billion while overall retail barely moved.
The trend line is clear. Stress that sat at the margins three years ago has moved into the middle-income, mortgaged mainstream.
Who is still spending
Not every segment is retreating. Otago’s 16% of “ethical pragmatists” remain financially stable and values-driven, and Watkins said durability, reuse and local purchasing are rising priorities even among resilient consumers. Shoppers trust personal recommendations over influencers, and are sceptical of AI personalisation and dynamic pricing.
That gives businesses a playbook. Stop segmenting by income band alone, because a $70,000 earner with a mortgage may now behave like a much poorer customer. Build value and durability into the pitch. Spend marketing money on referral and word of mouth rather than paid celebrity. And be wary of dynamic pricing that a stressed, sceptical customer will read as gouging.
The Christmas test
Young says retailers will be looking for signs that shoppers are ready to loosen the purse strings as the year closes. The Otago data suggests they should not stock up on that hope. Until card growth shows up as volume rather than petrol bills, the safest assumption is that middle New Zealand is shopping like money is short, because for a growing number of them, it is.
Sources
- RNZ: Middle income, uni degree no protection from financial struggles – researchers (2026-10-15)
- RNZ: Study reveals different types of consumers, which one are you? (2026-10-15)
- NZ Herald: Cost of living – More Kiwis struggle to afford essentials, seek cheapest products (2026-10-14)
- Stats NZ: Household income and housing-cost statistics, year ended June 2025 (2026-02-26)
- Stats NZ: Increasing household income offset by higher housing costs in year to June 2025 (2026-02-26)
- Stats NZ: Living-costs price indexes, June 2026 quarter (2026-06)
- Westpac: Retail spending pulse (2026-10-07)
- Retirement Commission: Money matters – how New Zealanders are feeling about their finances (2023-08)
- Treasury: Fortnightly Economic Update, 14 August 2025 (2025-08-14)
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