Positive January retail sales figures paint one-sided picture, says Retail NZ boss
National retail sales were up 13.5 per cent in January on data from a year earlier, but the positive figures may not show the realities of the wider sector.
Industry year-on-year total sales since March 2020 are up 6.4 per cent.
The positive growth figures represent the eighth straight month of increased sales throughout the sector since the onset of the coronavirus pandemic last year.
Retail sales took a dive in March 2020 and plunged further in April, however, overall sales began to recover in May and returned to growth territory from June. Sales have gone from strength to strength since then, which analysts and economists pin on captured spend due to the indefinitely closed borders and a strong housing market.
While the latest Retail NZ sales index data was encouraging – and could perhaps be interpreted as the industry having undergone a recovery, Retail NZ chief executive Greg Harford said the figures did not show how many retailers were still struggling.
“Our sense is that [trading] is going very well for about three-quarters of retailers, but there are a quarter of businesses that really aren’t firing in the way that they need to if they are going to survive,” Harford told the Herald.
Retailers focused on servicing the tourism market located in international tourist hotspots, and those located in central business districts in major cities, were among businesses struggling.
“One small business member we spoke to the other day received literally $25 in sales during a day,” he added. Retail NZ estimates that thousands of retail businesses were in similar dire straits situations.
For the majority of the sector, the retail membership organisation forecasts that spending will continue in the months ahead as demand for goods remains elevated.
Electronic card spending in December rose 3.5 per cent by $250 million when compared with December 2019 figures, while core retail industries rose 4.8 per cent by $305m.
The spend on durables was up 6.7 per cent or $145m in the month, consumables up $188m or 7.5 per cent and apparel up $38m or 8.2 per cent. Sales of motor vehicles rose by $19m or 9.6 per cent in the comparable period, while the spend on hospitality fell by 5.3 per cent or $66m.
The total value of electronic card spending, including the two non-retail categories, was up $169 million or 1.8 per cent compared with December 2019.
Seasonally adjusted estimates showed a 4-5 per cent pullback in monthly retail card spending in December, with core card spending down 5 per cent month on month.
A note by ASB outlined that despite a slight pullback in December, the retail sector “has surprised with its resilience”.
“There is hope this resilience could continue over 2021. The booming housing market and low mortgage interest rates could provide continued support. Wages look set to firm given marked shortages for skilled labour,” the bank said in an analyst note.
“Nevertheless, some retail headwinds remain, including the risk of another Covid-19 outbreak in NZ, the likelihood that households
already have their fill of consumer durables and the lack of inbound tourists/slowing population growth caused by the border restrictions.”
Industry commentator Ben Goodale said a 13.5 per cent rise in national retail sales in January compared to the same month in 2020 was a “sensational result”.
He said he believed the retail sector had recovered, but acknowledged there were segments that were not experiencing a large uplift in sales.
Goodale was one of few commentators to predict a strong, quick bounceback after the initial lockdown: “Consumerism is such a powerful force.
“Will strong spending continue? Yes, the country is in great shape, we’re almost unique in the world at the moment with our success with Covid and there’s almost an economic boom at the moment; retail is strong, the property market is going nuts and the unemployment rate is much lower than predicted.
“The biggest problem in retail at the moment is the shortages – supply chain issues – that is suppressing some retail spending. Ironically, sales would probably be higher if we could get all of the stock.”
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