Quarter 2 Showcases Challenges In Retail Sector

Following last weeks announcement from the Reserve Bank cutting the Official Cash Rate (OCR) by 0.25% and promises of further cuts to follow, the quarter 2 retail spending data demonstrates just how challenging it has been for the sector.

The data released this morning shows that Retail activity fell by 1.2% for the June quarter, showing a drop of $24bn (seasonally adjusted $30bn) with 14 of 16 regions having lower seasonally adjusted sales, exceptions being Canterbury and West Coast. Wellington continues to show low confidence with sales values down by 3.3%.

“We are all hoping that last weeks OCR cut and the recent tax cuts will help kick start the economy and provide a change in fortune for retail. While we appreciate it’s not going to happen overnight, that shift in consumer confidence is critical. The continued financial pressures over the last couple of years has squeezed households spending appetites.”

The announcement today continues the trend of recent months and aligns with Retail NZ’s recent Retail Radar quarterly survey which showed that 71% of members failed to meet sales targets last quarter and 42% of retailers are uncertain if they can survive the next 12 months.

While it feels like it has been more of the same, we are hoping to see some momentum in the economy over the next few months to help provided momentum into that critical last quarter of the year for retailers. We are looking forward to talking about more a positive outlook and sales in the coming months.

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