HomeNEWSData digest: The retail financial year in review

Data digest: The retail financial year in review

The review found while overall retail growth has been strong at 5.7 percent, the growth has been inconsistent across different categories.

Categories such as hardware and homewares, tourism, food and beverage and accommodation have all experienced strong growth, driven by the residential property boom in Auckland and Canterbury and an influx of international visitors.

Almost 775,000 visitors came to New Zealand in the quarter ending 30 June, an increase of 29.2 percent.

Strong housing markets and record levels of immigration meant retail grew 9 percent in Auckland and 11.1 percent in Christchurch.

As a result, food and beverage services grew by 10 percent in 2015, while accommodation grew at 8.9 percent.

Hardware, building and garden supplies grew 8.4 percent. The review says this is due to increased residential building and growing house prices. The report forecasts this will remain strong in the medium turn.

However, the rest of the country didn’t have as strong a showing as Auckland and Canterbury.

Other regions, particularly ones affected by falling dairy prices, experienced much lower growth – 1.9 percent in the rest of the North Island and 1.2 percent in the rest of the South Island.

Department stores only grew at 6 percent, while supermarkets experienced 2.4 percent growth.

The clothing, footwear and accessories category has recovered from a 2.1 percent drop in 2014.

It experienced 3.2 percent growth in 2015 to reach $3.4 billion, but it hasn’t quite reached the same peak it had at the end of the global financial crisis in FY11 of $3.5 billion.

The report says this weakness in apparel retail has also been reflected in publicised company failures this year, such as Jean Jones, Identity, Shanton, Cooper Watkinson, as well as profit warnings for Kathmandu, Kirkcaldie & Stains and Pumpkin Patch.

Feedback from apparel retailers is that they’re still facing increasing pricing pressure and competition from their overseas counterparts.

“New Zealand retailers often quote international competition as a key concern and point to prominent UK retailers such as ASOS, Next, and Marks and Spencer offering free shipping to New Zealand. This is economically viable for UK retailers who effectively offset the shipping cost against the VAT (value added tax) they do not pay on export,” the review says.

Online retail spending was up 19 percent in June 2015 compared to the previous year.

However, the growth was majority international retailers (29 percent) over domestic retailers (12 percent).

Consumer confidence, which is closely interlinked with retail strength, has also experienced a fall.

The one-year outlook for consumer confidence is down to 104.8. In March, it was 123.8.

However, the review ends on a positive note, with overall growth expected.

“We expect retail to continue to grow overall but with the same variation in category and regional growth levels as identified in this review, and with a note of caution given the large drop in one-year outlook for consumer confidence,” it says.

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