Nearly half of retailers across New Zealand failed to hit sales targets over the usually busy Christmas period as inflationary pressures squeeze households, according to the latest Retail Radar report by Retail NZ.
“The softened consumer demand during the typically peak season for retailers has unfortunately hit home over Christmas,” Retail NZ CEO Greg Harford said. “While 63 per cent of retailers had expected to hit their sales targets for the quarter, only 34 per cent managed to achieve this.”
Harford said the soft performance during the lead up to Christmas 2022 has led to a pessimistic outlook for the retail sector going forward.
“Half of retailers are expecting not to meet sales targets in the next three months, and 30 per cent are not confident their business will survive the next 12 months,” Harford said. “This demonstrates the seriousness of the challenges faced by the sector.
“Additionally, price increases are likely to continue, with retailers impacted by external factors pushing up prices. 92 per cent of retailers report that supplier price increases are the biggest factor, whilst freight and wage increases are also influencing factors.”
Harford noted that on average, Retail NZ members reported that prices rose by around 7.7 per cent in the last quarter, and forecast an additional 7.1 per cent increase in the first quarter of 2023.
“While retail prices are only one factor in the official Consumer Price Index, this does show that there are still significant headwinds facing the economy. Inflation continues to be a critical ‘top of mind’ issue impacting retail operations, as does supply chain pressures, and employee shortages.”
For the fourth quarter of 2022, 19 per cent of NZ retailers said they exceeded sales targets. Looking forward, 47 per cent said they expect to meet targets in the next three months, compared to just five per cent who say they will exceed them.