Retail Confidence Rises Despite Economic Pressures

Retailers across New Zealand are showing renewed confidence in the face of ongoing economic challenges, according to the latest Retail Radar report from Retail NZ.

The quarterly survey, covering April-June 2025, reveals that 69% of retailers are confident or very confident their business will survive the next 12 months — a notable increase from 57% in the same quarter last year.

This aligns with the findings of the recent NZIER Quarterly Survey of Business Opinion for Q2 2025 that found retailers were more optimistic about the economic outlook than other sectors. Retailers were 13% more likely to expect better general economic conditions over the coming months than the general business population.

The optimism recorded in Retail Radar comes despite 62% of retailers failing to meet their sales targets in the past quarter. However, expectations are improving, with 60% anticipating they will meet or exceed targets in the next three months — up from 49% in Q1 2025 (January-March) and 32% in the April-June period last year.

“Retailers are resilient,” says Retail NZ Chief Executive Carolyn Young. “While the economic environment remains uncertain, the sector is showing signs of cautious optimism, supported by inflation at 2.7%, steady OCR at 3.25%, and a slight uptick in card transaction spend.”

Recent StatsNZ data shows retail sales volumes rose 0.8% compared to the last quarter of 2024, though growth remains modest at 0.65% year-on-year, and still below 2023 levels.

Retailers continue to grapple with a range of issues, including:

• cost of living pressures
• insurance
• lease and rent increases
• Freight costs

“In spite of the confidence expressed by Retail Radar respondents, we are continuing to see retailers across the country shutting their doors due to increased pressure on cost of living, lease and rates increases,” Ms Young says.

Following a recent trial by Foodstuffs North Island and guidance from the Office of the Privacy Commissioner, Retail NZ also asked members if they were likely to use Facial Recognition Technology (FRT) to combat retail crime.

Only a small number of larger retailers are considering adopting FRT. The main barriers raised by respondents about use of FRT include:

• High implementation and maintenance costs (69%)
• Potential public backlash (36%)
• Need for more evidence of effectiveness (32%).

“FRT may be a useful tool for some, but it’s not a one-size-fits-all solution,” says Retail NZ Chief Executive Carolyn Young. “We know that FRT has proven to be effective in identifying recidivous offenders in-store. However, it requires a considerable commitment to implement, train and maintain FRT in-store.”

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