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Retailers are hanging on to their storefronts by their fingertips as customers spend less and costs for wages, insurance and freight go up.
Stats NZ figures show electronic card spending fell 0.6 percent in June, while the value of sales had dropped 4.9 percent on a year ago.
Retail NZ was surveying its members on trading conditions and so far, more than 70 percent of respondents did not meet sales targets for the second quarter.
Chief executive Carolyn Young said that meant many retailers could not cover costs.
"We are seeing businesses close, absolutely. So retailers are responding to the environment they're in. Big retailers will be looking at, when the time comes to renew their lease, they'll be thinking about is that still profitable?
"If you're a smaller retailer, you'll be probably considering if somebody resigns from the job, do I need to replace that staff member? What are the other levers I can pull? Can I get new stock in or broaden the stock that I'm doing?
"So there are some different levers that the different size businesses will look at pulling in order to survive through this."
She said last week's change of tone from the Reserve Bank on rate cuts was positive, but there would be a delay before retailers saw results.
"We do know there's a lag factor. It's not going to happen straight away. So even if interest rates are cut, people aren't going to feel that impact immediately."
Young said the government's tax cuts, due at the end of July, along with any changes to interest rates might help to minimise business losses.
ASB senior economist Kim Mundy said high interest rates and household costs and rising job insecurity meant consumers were not spending.
But she said the tax cuts were unlikely to start a shopping spree.
"When uncertainty for consumers is so high, consumer confidence is very low at the moment. The risk is in our mind that we'd really be surprised to see consumers opting to heavily spend this money rather than save it in case they need it in the future.
"We're not expecting to see a spending spree off the back of that, which suggests that the economy should still continue to sort of evolve the way it is.
"That means we should be in a position where the Reserve Bank could say, 'hey, job done, we can start taking some of that pressure off the economy now'."
Mundy said consumers were reacting the way the central bank wanted them to, by pulling back on spending to help rebalance the demand and supply of the economy.
She said pricing pressures were starting to ease, which should open the door to OCR cuts later in the year.