HomeNEWSDairy downturn a time bomb for rural retailers

Dairy downturn a time bomb for rural retailers

Mackle says this will affect farmers for at least the next 18 months, and will remove $2.5 billion in total from local economies.

Fonterra Farm Source is a wholly owned subsidiary of Fonterra. Through its 72 branches, it sells farming supplies such as feed, gumboots and calving equipment. Its director Jason Minkhorst says the company is using its cooperative strength to support farmers where it can, such as extending interest-free terms until the end of the year.

“Yes, times are very tough for our farmers at the moment. They are still spending on core items to ensure they can continue to run their farming activities and ensure animal welfare. But as you would expect there has been less spending on maintenance related items or investment in large capital items.”

Retail NZ’s general manager public affairs Greg Harford concurs, saying retailers in heartland New Zealand have told the organisation that they are expecting a slowdown which has not yet hit.

“In fact, the feedback we’re getting is that rural and heartland stores are perhaps slightly more positive than their urban cousins are – at the moment.”

Harford warned that the reduced dairy payouts would likely flow through to reduced retail spending in the coming months, so it will be more important than ever for retailers to manage stock levels and cashflow closely.

Retailers in Taranaki told Radio New Zealand they had already seen sales decline by 10-20 percent.

The latest retail trade survey, released by Statistics NZ on Friday, shows retail sales growth easing to just 0.1 percent in the June 2015 quarter on a seasonally-adjusted basis. Commenting on this, Retail NZ chief executive Mark Johnston says a range of factors may be responsible for this, including greater economic uncertainty and particularly bad weather which had impacted sales up and down the country.  

Johnston spoke of the challenge posed by ecommerce, but was ultimately positive about the retail outlook over the next few months.

“Despite the challenges, retailers are expecting sales over the next quarter to be steady, and for job numbers in the sector to remain stable.  It’s not long until the Christmas shopping season begins, and retailers will be hoping that New Zealanders get out shopping well ahead of the big day in December.”

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