There are indications that New Zealand retailers might have passed the worst of the economic downturn, though the outlook is still far from hopeful.
Retail NZ said the latest Stats NZ data show a slight increase in consumer spending, but the overall outlook remains grim. This manifests through the recent closures of major retail chains like Smiths City and Kitchen Things, along with smaller, long-standing shops in many areas.
A retail sector report from brokerage Forsyth Barr predicts that three out of four listed retail companies, including The Warehouse Group, Briscoe Group, and Hallensteins Glassons, will underperform.
The fourth one, KMD Brands, is undergoing restructuring that includes closing 21 stores.
The report said Tasman expects a more optimistic outlook.
Meanwhile, Retail NZ chief executive Carolyn Young said most New Zealand retailers remain pessimistic, with two unnamed major retailers planning staff layoffs and cost-cutting measures.
“We know through our advice line that we’ve had a lot of calls about restructures, stores closing, and a lot of HR issues in terms of managing performance, and all of those things point us to the fact that businesses are still struggling,” Young said.
“I know one of the big retailers… they’re closing 16 stores. I know another retailer that’s closing a whole brand.”
She said the major players are pressured to reduce spending and boost sales, all while coping with rises in operating costs like insurance, utilities, and freight.
Young also said small rises in card spending had little impact due to the increasing prices of consumer goods, especially in groceries and hospitality.
Although retailers still operating were starting to experience more customers, Young said this was directly due to the closure of nearby competing stores.
“So green shoots are coming at the demise of other people. So the overall sector is not growing, or we haven’t seen it grow as of yet.”
Young said only time would reveal if the sector had hit the lowest point in the cycle, with peak spending in November and December still ahead.