Retail sales were down more than 2 percent in 2024, compared to the previous year. File photo. Photo: Yiting Lin / RNZ
The latest retail data - showing year on year decline in spending - is unsurprising, says the head of Retail NZ, who warns that it may be another half year before the economy and the retail sector takes a turn.
Stats NZ's electronic card transactions data, released on Tuesday, showed total sales for 2024 were 2.2 percent down compared to 2023.
While retail spending increased by 2 percent for December 2024, compared to November, the total spending for the month fell 1 percent compared to December 2023.
Retail NZ chief executive Carolyn Young said the figures showed how challenging it had been for businesses and consumers.
Retail NZ chief executive Carolyn Young Photo: Supplied
"Getting the numbers and being able to see them really just highlights how difficult it's been for retail and it reflects on the wider community around how difficult it is for New Zealanders around the country and how tight income is."
Young said two difficult years in a row have culminated in a large number of businesses closing and liquidating.
She said retail businesses have been trying hard to survive, and sometimes doing it at the cost of profitability.
"There's lots of sales happening all the time, and that's an indicator that businesses are trying to get foot traffic in the door to sell and move stock,
"But doing it at a lower price impacts on productivity, so there's a piece about being agile and adjusting to the market needs, but there's also a bit about how do you ensure you remain profitable," she said.
Young said it may take another five to seven months for the economy to turn - a longer and slower recovery the she'd anticipated.
"Getting through the next six months is really critical," she said.
Young said she looks forward to seeing benefits from the government's new Economic Growth portfolio, and what initiatives the new minister Nicola Willis will bring to the table.
"We really need to see the focus on growth as we move forward to get out of the dull drums where we're at, get job security for consumers, increase that consumer confidence," she said.
Infometrics principal economist Brad Olsen said high inflation and high interest rates previously are continuing to influence how people spend.
Olsen said retail spending was unlikely to bounce back quickly.
"We'd expect that it's not going to be a quick immediate revival in retail spending in early 2025, there's still enough economic challenges and concern.
"Unemployment has been likely trending higher, and job activities hasn't been quite as strong," he said.
Olsen said as people refix onto lower mortgage rates over the first six months of the year, people may have more disposable income in the second half of the year.
"From the second half of this year, we expect a little bit more economic momentum to start to come through in the economy, but of course for a lot of businesses that will be a long time coming after some pretty difficult trading conditions over the last couple of years," he said.
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