NZ Retail: No Catalyst in Sight

NZ Retail: No Catalyst in Sight

Sluggish retail environment and an onslaught from offshore websites make life difficult for domestic retailers.

Executive Summary
The NZ retail environment continues to remain lacklustre despite fairly low interest rates. Household spending, which surged from 2002–2008 on the back of a buoyant economy and high house prices, is now experiencing a period of tepid growth. High debt levels racked up by consumers during the boom phase stultified household balance sheets. As a result, consumers are now resorting to austerity measures like never before.

We expect continuing weakness in consumption over the next two years. House prices, the main driver of retail spending in NZ, will likely remain sluggish because of a weak jobs market and stagnant immigration. In addition, housing is incredibly expensive in NZ compared to incomes perspective, and consequently, any further interest rate reductions are unlikely to meaningfully improve housing affordability.

NZ_Retail_Report.pdf

ENDS

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