New Zealand retail sales, confidence rebounded after lockdowns eased

Clothing shop

New Zealand retail sales recovered during September as restrictions relating to the second wave of Covid-19 were lifted, according to the latest Retail NZ Retail Radar report. 

Sales rose by 20 per cent with 45 per cent of retailers reporting that their sales improved on a year-on-year basis. However, sales activity is spread unevenly across the sector, and just over a third of retailers report that their sales are down.

Retailer confidence, meanwhile, improved with 78 per cent saying they are ‘confident’ or ‘very confident’ their business will survive the next year, a substantial improvement on the somewhat dire predictions of a month earlier when a quarter of retailers felt they were “on a knife edge” financially.

“While these are positive signs, the significant fluctuations we are seeing, particularly in retailer confidence, points to the overall fragility of the retail market,“ said Retail NZ CEO Greg Harford. “Retail businesses typically operate on very low net margins, and if customers are unable to shop, there are real cash-flow issues that threaten the survival of retail businesses.”

Harford said 24 per cent of New Zealand retailers have reduced their staff count since April 1 and 15 per cent plan to do so over the next few months. 

“Covid-19 is not the sole cause of these retail job losses. Twenty-one per cent of retailers that had to reduce employee numbers said they did so because of the $1.20 an hour wage increase which came into effect on April 1, at almost the same time that the entire country went into the highest level of Covid-19 lockdown,” he said.

Meanwhile, Kiwis are continuing to shop online despite movement restrictions being lifted.

Six in 10 retailers report an increase in online sales year on year, compared with just 35 per cent of retailers selling only through brick-and-mortar stores. 

“Our report also shows that 77 per cent of retailers are now trading online which is a significant increase in digital capability since the start of the year. Twenty-four per cent of respondents say that they have moved to establish online trading since Covid-19.”

Despite the growth, 18 per cent of retailers surveyed cited adapting to trading online was the most significant issue facing their business. 

“There remain significant challenges to trading online, particularly for smaller retailers. The cost and time commitments are large and ongoing, it also requires technical skills and knowledge to get up and running,” Retail Radar reported. “Another serious challenge is competing with the size and reach of international retailers.”

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