Close
 

Rural consumers experiencing relief

  • Opinion
  • June 8, 2015
  • Felix Delbruck
Rural consumers experiencing relief

Retail activity has continued to gather momentum. In the December quarter retail sales volumes rose 1.7 percent, the fastest quarterly growth since mid-2012. And the cards numbers suggest the pace has accelerated further into 2015. Stripping out fuel and other vehicle related items, electronic card spending rose 2.2 percent over January and February alone.

It’s now very clear that the drop in petrol prices since late last year fattened consumers’ wallets and boosted their spending. But the broader economic backdrop has also been favourable, and is likely to stay that way into next year – the Canterbury rebuild has yet to reach its peak, migration continues to boom, and low inflation has kept interest rate hikes off the table. The Reserve Bank has even signalled that it could lower the OCR further if inflation trends remain weak. We think it’s unlikely to do so given the strength of the wider economy, but financial markets have latched on to the possibility, pushing wholesale interest rates and fixed mortgage rates down.

So we were not at all surprised to see the Westpac McDermott Miller Consumer Confidence Index ticking up in the three months to March, or retailers expressing greater optimism in the latest ANZ business survey.

What did come as a surprise is the regional breakdown of the survey responses, with a particularly big lift in confidence outside the main urban centres. Consumer confidence in rural regions fell sharply late last year, and through the dry summer we were braced for more signs of rural pain amid urban gain. But rural sentiment seems to have largely bounced back. Even in the dairying heartlands of the Waikato and Southland, where people still feel less confident in their regions’ economic prospects and their own finances than they were six months ago, many think that it’s a good time to spend. Likewise, the latest ANZ business survey showed a sharp rebound in confidence in the agricultural sector.

It seems that farmers and rural consumers were braced for the worst late last year, when some analysts were predicting that Fonterra would downgrade its season milk price forecast to well below $5/kg and the threat of drought was just starting to emerge. At least one of those threats has since diminished. Soil moisture levels have been improving, and Fonterra has moderated its estimates of the likely hit to the season’s dairy production.

Meanwhile, confidence among urban consumers has stayed healthy rather than exuberant. In some ways this is just as surprising – cheaper petrol, falling mortgage rates, and rising property prices have been a boon to urban consumers and home owners. But it may be that rising house prices are creating as much angst as joy. Judging from the building consent figures, the response of Auckland construction to the obvious need for more building remains disappointingly sluggish, which doesn’t create confidence that the housing shortage will ease any time soon. Another factor keeping urban confidence in check may be the high exchange rate. While the NZ dollar has fallen against the US dollar in recent months, it has moved sharply higher against the euro, yen and Australian dollar, which is not good news for urban manufacturers or non-commodity exporters.

Time will tell if rural confidence continues to hold up. One side effect of drought concerns was a steep lift in global dairy prices through February – New Zealand is a sufficiently big player in global dairy markets that local drought can crimp global supplies. Now that fears of a New Zealand production squeeze have diminished, global prices have also come back.

And dairy prices aside, there is no doubt that the economy is running at multiple speeds. One reason is that the migration boom has been very uneven. While Canterbury, Auckland, Hamilton, Tauranga and Queenstown all enjoyed population growth above 1.5 percent last year, and Wellington and some smaller centres also saw population growth pick up, in many other regions it’s stayed distinctly lacklustre. Unsurprisingly, Auckland and Canterbury also experienced some of the strongest growth in retail spending over the past year.

So the survey results need to be put in perspective. But for now we’ll endorse their main message – it could have been even worse.

This story was originally published in NZ Retail magazine issue 737, April/May 2015.

This is a community discussion forum. Comment is free but please respect our rules:

  1. Don’t be abusive or use sweary type words
  2. Don’t break the law: libel, slander and defamatory comments are forbidden
  3. Don’t resort to name-calling, mean-spiritedness, or slagging off
  4. Don’t pretend to be someone else.

If we find you doing these things, your comments will be edited without recourse and you may be asked to go away and reconsider your actions.
We respect the right to free speech and anonymous comments. Don’t abuse the privilege.

 
Sponsored content

How eCard Solutions is boosting sustainability with recyclable gift cards

Consumers, for some time now, have been looking at their consumption of plastic. Single-use plastic shopping bags were banned in New Zealand during July 2019 ...

 
 

My feet and I are begging Ziera to pull through

  • Opinion
  • October 4, 2019
  • Sarah Dunn
My feet and I are begging Ziera to pull through

New Zealand heritage footwear retailer Ziera has gone into voluntary receivership. NZ Retail and The Register editor and associate publisher Sarah Dunn considers its place in the market and what needs to happen for it to return to form.

Read more
 
 

Genoapay enjoys strong growth in New Zealand

  • News
  • October 3, 2019
  • The Register team
Genoapay enjoys strong growth in New Zealand

As buy now pay later services continue to grow in popularity, Latitude Financial has announced that its digital payments platform Genoapay has partnered with 26 merchants.

Read more
 

Social scoreboard

Zavy and The Register have worked together to create a scoreboard that compares how the top 25 traditional media advertising spenders in New Zealand have performed on social media over the past 30 days, updated in real time.

 
topics
Concept to closet
Business coverage of New Zealand Fashion Week.
Regional rollercoaster
What does retail look like in 2019 for ...
Town centres
A positive retail environment over the past 12 ...
Amazon Arrival
Keeping up with all things Amazon as it ...
The Retail Yearbook 2017
As we battle our way through the busiest ...
The future is bright
We spoke with four retailers in their twenties ...
Hospitality enhancing retail
Some think food and integrated hospitality offerings will ...
Spotlight on signage
At first glance, the humble in-store sign might ...
Red Awards 2016
The Red Awards for retail interior design celebrate ...
Auckland Unitary Plan
Auckland is changing. The Unitary Plan will decide ...
How to open a store
Sarah Dunn considers what it would take to ...
All things to all people
Kiwi retailers share their omnichannel strategies.
Rising stars
Retail's top young achievers.
Delivering on your promises
The sale isn't over until your item is ...
Retail in heartland New Zealand
Retailers keep the regions pumping, but how strong ...
Sisterhood
Women in retail help one another. We spoke ...
The changing face of retail
Shifting demographics are creating big changes in New ...
The retail yearbook
With the help of experts in the retail ...
Retail rogues
We put the spotlight on staff training. Jai ...
Here come the giants
Topshop has arrived in Auckland’s CBD, David Jones ...
From retail to e-tail
Ecommerce has become part of the way mainstream ...
Loyalty in the digital age
How are retailers maintaining loyalty? Sarah Dunn, Elly ...
Window shopping: A spotlight on social media
Sarah Dunn and Elly Strang look at how ...
The Innovators | In partnership with Spark Business
Technology is rapidly changing the retail industry as ...
 

Hallenstein Glassons posts $29m profit for the year

  • News
  • October 3, 2019
  • Radio New Zealand
Hallenstein Glassons posts $29m profit for the year

Hallenstein Glassons has had a modest lift in sales and profits, helped by growth in Australia and online sales.

Read more
 
 

Five things companies should consider before they scale up

  • Opinion
  • October 3, 2019
  • Ben Kepes
Five things companies should consider before they scale up

Ben Kepes is a technology analyst, commentator and consultant. His commentary has been widely published in such outlets as Forbes, Wired and The Guardian, while he has also been an investor in a large number of early-stage technology start-ups across three continents and has had successful exits to listed and privately held companies in Canada, the US, and the UK. He currently sits on the boards of a number of non-profit, privately held and listed companies in New Zealand and the UK and has won a number of accolades, including being a recipient of the Sir Peter Blake Leadership Award in 2016. Here, he shares five things companies should consider before they scale up.

Read more
 

Countdown celebrates its top suppliers

  • News
  • October 3, 2019
  • The Register team
Countdown celebrates its top suppliers

In its annual supplier awards this week, Countdown has highlighted its top suppliers.

Read more
 
Next page
Results for
Topics
Jobs
About us.

The Register provides essential industry news and intelligence, updated daily. And the digital newsletter delivers the latest news to your inbox twice a week — for free!

©2009–2015 Tangible Media. All rights reserved.
Use of this site constitutes acceptance of our Privacy policy.

Advertise
The Register

editor@theregister.co.nz

Content marketing/advertising? Email anita.hayhoe@icg.co.nz or call 022 639 3004

View Media Kit

}