Retailers say they are finding it difficult to turn a profit, with razor thin profit margins. File photo. Photo: 123RF
Retailers are looking at another tough year ahead, with a continuing drop in consumer spending and commercial activity indicated in recent data.
Latest numbers from Stats NZ show retail spending using electronic cards fell 1.8 percent in February on the month before, or 2.5 percent up on than the year before.
There were falls for nearly all the categories, with the biggest declines in fuel, consumables - food and drink - and durables: appliances and electronics, furniture, and clothing.
ANZ chief economist Sharon Zollner said the latest spending data was in line with activity on the roads.
The ANZ Truckometer showed the light traffic index rose, which was an indicator of economy activity, six months ahead, rose 1.9 percent in February over January, while the heavy traffic index rose 2.4 percent.
"The truck data tends to be correlated with activity in real terms, so when trucks are moving stuff, activity is happening," Zollner said.
However, she said last month's overall Truckometer reading was trending lower on a per capita basis, given the recent spike in population growth.
The most recent migration data indicated a near record population gain of 126,000 in December over the year earlier, with fresh data expected to be released later this week (14 March).
Retail NZ chief executive Carolyn Young said retailers were finding it difficult to turn a profit, with razor thin profit margins.
"There's closures of some businesses happening. Retailers are telling us that they're still getting some foot traffic through the stores, but conversion to sale is really difficult. And when people do buy, they're spending significantly less so," Young said.
"It feels like it's going to be a really long 2024."
Young said consumers with loyalty cards and memberships were being bombarded with end of season sales offers.
"So when you're getting through your inbox.... you're getting constant messages of sales at various stores. That's unusual to see sales on all the time and that tells you that some of those businesses are trying to move stock because they've got more stock coming in because seasons are changing. So it's just really difficult right now."
She said the outlook was for more of the same, even once the Reserve Bank begins to drop the official cash rate (OCR) and mortgage interest rates begin to come down.
"It is going to be like a slow burn. Often people are thinking you know, once the Reserve Bank reduces the OCR, that's going to be really great, but it will take some time before it actually flows through to consumers.
"As businesses are closing, there's gonna be more people with less money anyway, because they might have lost their job. So it is just really tough."