Hope Triumphs Over Retail Reality

Beleaguered retailers are feeling more confident about their future, even though many are still struggling to meet sales targets, according to the latest Retail Radar quarterly survey of Retail NZ members.

Retail NZ’s quarterly ‘temperature check’ shows a noteworthy uplift in confidence, with 65% confident or very confident that their retail business will survive the next 12 months, compared to just 58% last quarter and 57% this time last year.

As the busy Christmas sales season approaches, retailers are expecting improvements in trading conditions. A startlingly high percentage of respondents (57%) think they will meet or exceed their targets in Q4 (October-December) compared to our last Retail Radar survey, when only 32% thought they would meet or exceed targets in Q3 (July-September).

“The fourth quarter is critical for retailers with key sales periods including the Labour Weekend sales, Black Friday sales and Christmas promotions. 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. Unfortunately, the remaining 43% don’t think they will meet their targets for Q4,” Retail NZ Chief Executive Carolyn Young says.

The Retail Radar results mirror the findings of other recent business sector surveys such as NZIER’s Quarterly Survey of Business Opinion and the New Zealand Herald’s Mood of the Boardroom.

The growth in confidence for retailers comes despite poor sales in Q3, when 70% of survey respondents did not meet their sales targets.

“Retailers are responding to green shoots in the economy, such as the recent falls in both the OCR and annual inflation, with a surprising rise in confidence. Optimism is the key word, yet sales data has still been weak,” Ms Young says.

Inflation/cost of living is still the main issue impacting retailers, but concern is declining with a drop from 80% in Q2 to 75% in the latest survey.

Rising insurance costs are continuing to have a big impact on business. However, concern over this has also fallen slightly with a drop to 53% (down from 55% in both Q1 and Q2 of 2024).

Anxiety over freight costs has increased, rising to 46% from 40% in the previous two quarters. This issue has just nosed ahead of cost of payments/merchant fees which are still in fourth place on the list of concerns at 45.2%, down from 44% last quarter.

On the first anniversary of the 2023 Parliamentary elections, Retail Radar asked how the Coalition Government had performed for the retail sector. Results show that the jury is out, with almost equal numbers saying the Government has performed poorly or performed well, while over 40% are neutral.

“Signs that the economy is starting to turn the corner is giving retailers hope for the future. We look forward to seeing a turnaround in consumer confidence and a greater willingness to support local retail businesses. It will be critical to see these changes in the final quarter of the year,” Ms Young says.

Read the Retail Radar Q3 2024 report here: https://retail.kiwi/insights-media/benchmarking-data/retail-radar/

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