More retail businesses are confident of surviving the next 12 months, but the sector still faces many challenges. File photo. Photo: RNZ / Dan Cook
Retailers are feeling more confident about their future, even though many are still struggling to meet sales targets, given the high costs of living and doing business.
The third quarter (Q3) Retail Radar survey of Retail NZ members points to an improvement in confidence with 65 percent confident or very confident that their business will survive over the next 12 months, compared with just 58 percent in the June quarter and 57 percent on last year's September quarter.
"The fourth quarter is critical for retailers with key sales periods including the Labour Weekend sales, Black Friday sales and Christmas promotions," Retail NZ chief executive Carolyn Young said.
"Many retailers rely heavily on strong sales during this period to ensure they have a buffer for quieter months. So it's encouraging to see that a significant number of retailers are expecting buoyant Christmas sales."
But she said 43 percent still did not expect to meet their sales targets over the fourth quarter, ending in December.
The growth in confidence followed poor sales in Q3, when 70 percent of survey respondents did not meet their sales targets.
"Optimism is the key word, yet sales data has still been weak," Young said.
She said inflation and cost of living were the main issues facing retailers, though concern had eased with falling inflation and recent cuts to the official cash rate.
However, anxiety over freight costs had risen to 46 percent in Q3, compared with 40 percent over the first half.
Concerns about about the cost of merchant fees rose slightly to 45 percent, and the cost of insurance continued to top the list of concerns for 75 percent of retailers.
When it came to the coalition government's performance, equal numbers of retailers thought it had performed well or poor over the first year in parliament, with 40 percent of retailers taking a neutral stance.