Retailers’ Confidence Grows In Spite Of Economic Challenges
New Zealand retailers are feeling more confident as they head into 2024, according to the latest Retail Radar quarterly survey of Retail NZ members.
The improvement in confidence levels comes in spite of economic headwinds and a challenging trading environment, says Retail NZ Chief Executive Carolyn Young.
71% of respondents to the quarterly Retail Radar survey for the period to 31 December 2023 advised that they are confident or very confident that their business will survive the next 12 months, with only 12% either not confident or not at all confident of survival. This is a marked improvement on the September quarter where only 57% of retailers were confident of their business sustainability.
“The change in Government has been the significant factor in improving confidence for the retail sector. Although the economic outlook is for very strong headwinds for the next 12 months, retailers are expecting to see greater support from the new Government,” Ms Young says.
The new-found confidence is also surprising given that 56% of retailers recorded that they did not achieve their sales targets in the December quarter. In September 56% of retailers said they were confident of achieving their sales targets for the quarter but only 44% achieved this goal.
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 more than 50% of retailers not meeting targets could spell challenges later this year.
Inflation remains the most significant issue for retailers with 57% expressing concern, followed by wage increases (43%) and freight costs (37%).
“Inflation is the key driver for price increases, with retailers advising that prices were impacted by increases in costs by suppliers, freight costs and wage increases,” Ms Young says.
Retail NZ is monitoring legislative changes and will continue to advocate for changes that will relieve pressure on retailers.