It’s hard work running a retail business, and this year has been unbelievably difficult. However, even though sales have yet to recover fully from the COVID-19 crisis, I’m delighted that the latest Retail Radar report shows a significant improvement in retailer confidence. 73 per cent of Retail NZ members are now saying they are confident their businesses will survive the next 12 months – a big jump from 39 per cent just a few weeks ago.
Spending in June was up substantially overall, although 28 per cent of retailers report that their sales were down in June. Partly that is attributable to pent-up demand from the lockdown period, but it also reflects the fact that Kiwis are not travelling overseas, and are instead undertaking projects at home.
However, despite the largely positive June, overall spending for the last four months is still down 16 per cent, and there are significant economic clouds on the horizon. Many jobs across the economy are at risk once the Government Wage Subsidy ends, and a number of households have taken mortgage holidays or accessed other support which will also end in the near future. These factors will likely squeeze consumer spending further, as households tighten their belts in the coming months.
It is absolutely critical that the Government remains focused on border security to prevent a further recurrence of COVID-19 in New Zealand, but it also needs to look at ways to stimulate the economy. There is strong support in the retail community for income tax cuts, a reduction in GST, and helicopter payments to households to support spending. Struggling retailers are also keen to a further extension to the Wage Subsidy, and cash grants to businesses to cover backdated rent relief and other operational costs.