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Retail growth: How long will it last?

  • Opinion
  • November 8, 2018
  • Satish Ranchhod
Retail growth: How long will it last?

In the year to June, retail spending levels increased by around 3 percent (excluding the impact of price changes). While that’s not slow, it is a noticeable stepdown from the rates of 5 to 6 percent annual growth that we saw in recent years. 

Spending growth is expected to hold up through the second half of the year, boosted by increases in transfer payments to households. That includes around $1.5b of spending on the Government’s families package and accommodation support payments, which will provide a significant boost to the disposable incomes of many households. However, that will provide only a temporary fillip.

Looking at the household sector more broadly, a period of softer spending growth is on the cards as we head into 2019. Much of the strength in spending in recent years was supported by high levels of net migration. That saw population growth surging to just over 2 percent per annum, providing a sizeable boost to our demand base. But while migration remains elevated, the net flow of people into the country has been declining. In fact, figures for the year to July showed that the net inflow of people into the country has slowed to its lowest level since 2015.

We expect that net migration will continue to slow as many of those who arrived in recent years on temporary visas depart. Improving job prospects in other regions are also making New Zealand relatively less attractive as a destination. Together, these developments will see net migration continuing to decline and population growth slowing to around 1 percent in 2022, signalling a huge reduction in what has been an ‘easy’ source of sales growth for many businesses. 

Spending growth will also be dampened by the slowdown in the housing market, which comes against a backdrop of significant policy changes targeting housing affordability and supply. These changes have seen nationwide house prices remain broadly flat since February. That’s a significant slowdown from previous years when prices were rising at double-digit rates. There’s been particular softness in Auckland and Canterbury where prices have been falling modestly in recent months. Prices are still rising in other areas, but at a more gradual pace than in previous years.

We expect that policy changes will result in modest house price declines over the next few years. Recent falls in mortgage rates, and a likely easing in the Reserve Bank’s loan-to-value restrictions in January, will provide some counterbalance to the changes in the policy backdrop. Nevertheless, we are still looking at a subdued outlook for house prices over the next few years.

New Zealand households hold a large proportion of their wealth in both owner-occupied and investment housing. Consequently, the softness in house prices is likely to be a significant drag on spending, especially for items like household furnishings, which tend to be closely linked to house sales.

Satish Ranchhod, senior economist at Westpac

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InStyle names All Is For All’s Grace Stratton a ‘Badass Woman’

  • News
  • July 18, 2019
  • The Register team
InStyle names All Is For All’s Grace Stratton a ‘Badass Woman’

Grace Stratton, the 20-year-old founder of specialty ecommerce site All Is For All, has been named one of 50 global Badass Women by US glossy magazine InStyle. The list includes international celebrities like Mindy Kaling and businesspeople like Stitch Fix chief executive Katrina Lake.

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Wellbeing in the workplace: Here's how its affecting your staff, and your bottom line

  • Opinion
  • July 18, 2019
  • Elly Strang
Wellbeing in the workplace: Here's how its affecting your staff, and your bottom line

Idealog editor Elly Strang recently spoke at the Magazine Publishers Association conference about the importance of wellbeing in the workplace, and the key takeaways from Wellness Month. She shares why it shouldn't be thought of as a luxury nice-to-have, like yoga classes, as research is showing it impacts on your bottom line, as well as some tips on how to create change in the workplace.

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How HomeAR is incorporating AR into architecture design

  • technology
  • July 18, 2019
  • Courtney Devereux
How HomeAR is incorporating AR into architecture design

Many people struggle to envision plans from simple 2D renders and floor plans, as without a designer's eye, filling in blanks from imagination isn’t the most reliable method when it comes to something as important as building a brand-new home or store. Reactar has launched an augmented reality-based platform, HomeAR, to counteract this, which allows users to see and engage with homes in a virtual way, making the very personal process more reliable.

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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.

 
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Simon West is the new chief executive of Torpedo7

  • Who's Where
  • July 18, 2019
Simon West is the new chief executive of Torpedo7

Simon West, who has 20 years' experience leading companies like Ezibuy, has been appointed the chief executive of The Warehouse Group's outdoor retailer Torpedo7.

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Bay of Plenty D2C Saltysea opens its first store

  • Design
  • July 17, 2019
  • Sarah Dunn
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  • News
  • July 16, 2019
  • Idealog
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Every business goes through a life cycle: start-up, growth, maturity and renewal, rebirth or decline. Once you’ve made it past the juicy, creative ideation stage and into the growth and maturity stage, the time for many comes to seek investment. But what do investors look for beyond a commercial return? And what do investors think New Zealand companies excel at when compared to our neighbouring countries around the world? Executive director of the Angel Association of New Zealand Suse Reynolds shares her top tips for those who are looking for investment.

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