Retailers Hope For Growth And Positivity In 2025

Retailers are feeling confident about their businesses’ surviving 2025, despite not meeting sales targets over the Christmas season, according to the latest Retail NZ Retail Radar survey.

The quarterly Retail Radar survey shows confidence in survival continuing its upward trend with 70% of respondents confident or very confident their retail business will survive the next year, up from 65% in Quarter 3 (July-September) 2024.

Retail NZ Chief Executive Carolyn Young says this continued positivity could be due to inflation staying steady at 2.2% for the last two quarters, the prospect of further Official Cash Rate cuts and the Government’s intention to make economic growth its top priority this year are all contributing to this positivity.

Retailers’ improved confidence levels are despite Stats NZ reporting that total retail sales were down 1% (and spend down $80,402,000) in December 2024 compared to December 2023, continuing the difficult trading environment experienced by retailers throughout 2024.

In the Retail Radar for Q3 2024, 57% of retailers had predicted they would meet or exceed their targets in Q4. The actual results for Q4 are a game of two halves, with only 45% meeting their targets, but 17% of retailers exceeding targets, well ahead of the 5% who expected to.

Continuing the trend of the last 12 months, inflation/cost of living (73%) and insurance increases (53%) are the key concerns for retailers. To succeed in 2025, 30% of respondents said they needed to see improved consumer confidence, lower inflation (17%), and merchant surcharge fee legislation (14%).

With a tough year behind them, retailers are taking a cautious approach to forecasting what lies ahead with almost half of businesses neutral about the outlook for 2025. The other half are balanced between a positive or a negative outlook, with slightly more being positive.

“Retailers are cautious on sales in the first quarter of the year with only 3% expecting to exceed their sales targets. Improved consumer confidence is vital to retail sales. Until consumers feel confident about their job prospects, ongoing stable levels of inflation and interest rates easing, they will continue to be cautious about discretionary spending,” Ms Young says.

“While they wait for that upturn, retailers are doing what they can to tread water. Some retailers are buying less or different stock to meet consumers’ changing needs, while others are looking to enhance their digital platforms to generate more online sales and some business owners are working more unpaid hours.

“However, some retailers are doing well. The key is remaining agile and ensuring their business meets the current market environment, as well as looking at how to reduce costs.”

To see the Retail Radar report, go to https://retail.kiwi/insights-media/benchmarking-data/retail-radar/

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