New Data From Kiwibank Reveals New Zealand’s Penny-pinchingSummer

Kiwibank, the largest New Zealand-owned bank, is providing insight into New

Zealand's penny-pinching summer with the release of the Kiwibank Household

Spending Tracker for the December 2023 quarter, and January 2024.

According to data collected from Kiwibank's electronic cards, consumer spend

rose 5% over the December quarter, but was muted compared to previous years –

up just 0.4% on 2022. Transactions were down by 3% over December compared to

2022 and down 3.3% on the quarter.

"It seems like New Zealanders opted to catch up over home-cooked meals and

reruns of Home Alone,” said Kiwibank's Senior Economist, Mary Jo Vergara.

“We saw a 6.2% increase in home and online entertainment at the expense of

nights out. And not even the allure of Black Friday and Boxing Day sales were

appealing enough for Kiwi to loosen the purse strings."

Financial conditions remain tight, and household disposable incomes are being

squeezed. As New Zealanders find ways to alleviate the pressure, discretionary

items such as home electronics are being removed from the budget.

BATTLE OF THE ANNIVERSARY WEEKENDS

Hospitality spend historically accelerates into the December period but the data

revealed a decline in 2023. The value and volume of spend at restaurants and bars

decreased by more than 3% over the quarter. Café spend fared just a little better.

The data reveals that weak hospitality spend looks to have continued into the start

of 2024, with the number of transactions made at restaurants and bars still

underperforming.

“New Zealand's two biggest cities enjoyed their respective anniversary days in

January, with Auckland taking the crown for 'Big Spender' with a 6% lift in total

spend volumes at restaurants, bars, and caf é s over the long weekend, compared

to 2023. In contrast, spending volumes during the Wellington anniversary weekend

declined by 3.2% compared to 2023,” said Vergara.

“Auckland’s Wynyard Quarter hosted the finale of the Red Bull Cliff Diving World

Series, which likely helped make a splash in spend over the long weekend.”

POT LUCKS AND LONG LUNCHES

Grocery stores experienced a 5.4% rise in spend, with December 23rd and 24th

accounting for just under 10% of the month’s total purchases. The data revealed a

6.2% rise in fruit and vegetables, as well as a 28% increase in spend on alcohol and

liquor.

“Again, this shows that Kiwi took to entertaining at home, stocking the pantry and

keeping busy in the kitchen as a way to keep discretionary spending low. There was

also a 5.1% lift at the local butcher. Meat prices have come under pressure as

products, especially lamb and mutton, from across the Tasman, continue to flood

overseas markets. The value of spend is down 1.2% from last year's levels despite the

rise in volumes,” said Vergara.

BARGAIN HUNTING

Some retail categories managed to record a rise in volumes as the value of

spending fell. The number of transactions made on home contents and furnishings

rose 1.3% compared to 2022's levels, while the value of spend declined by 5%.

Other retail, however, recorded a drop in value and spend volume. Both the value

and volume of clothing spend declined by around 11% compared to a year ago.

Home electronics experienced the same, with a 1.8% drop in values and a 3.5%

drop in volumes.

“Everywhere you looked, retailers seemed to offer bargains, discounts and deals.

For some, November's Black Friday lasted a week, while Boxing Day sales began

before we even cut into the Christmas ham. On top of that, the type of retail on

sale was across the spectrum – from clothing to couches, electronics to e-bikes,

frisbees to fridges, and hammocks to hardware.

“Overall, it’s evident that retail spend is struggling as household demand struggles

amidst tight financial conditions.”

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