March has been a successful month for retailers in terms of card spending, however results are uneven across the industry, and inflationary pressures are building, according to Retail NZ.
Despite spending constraints during the first week of March due to Aucklands return to alert level 3, card sales rebounded from a lacklustre February.
Seasonally adjusted card spending rose by $53 million (0.9 percent), in four of the six retail industries. Higher sales were found with long-lasting goods such as furniture, hardware, and appliances, up $29 million (1.8 percent).
The grocery and liquor (consumables) industry had the largest fall, down $74 million (33 percent) from February.
“Recent monthly falls in the consumables sector reflect the softer growth in this industry following the much higher spending levels seen since the Covid-19 outbreak in March 2020,” says retail statistics manager Kathy Hicks.
Retail NZ chief executive, Greg Harford, says despite the fact that spending was up in the first quarter of the year, not all retailers are seeing the benefits.
“42 per cent of retailers did not hit their sales targets for the last quarter, and more than two-thirds of Auckland retailers failed to perform. This was attributable to Auckland yo-yoing in and out of a Level 3 lockdown in February and March this year.”
Harford says there are significant inflationary pressures building, as the cost of procurement and freight increase, and the cost of employing staff goes up. Similarly, minimum wage increases will have an impact on retailers.
“The increase in the base Minimum Wage affects all wages in retail, as employers strive to maintain relativities within their businesses, but there are other consequences beyond cost.
“37 per cent of retailers say that they will now have less ability to reward performance, while a third will be looking to reduce hours or the total number of people employed over time.”