Core retail sectors remain weak

ANDREW GORRIE

BARGAIN HUNTERS: Wellington department store Kirkcaldie & Stains expects a good winter sale as customers look for good deals.

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Higher car sales jump-started a small rise in overall retail spending in May, but outside the still-recovering car market, retailers are struggling to find a spark in sales without offering a bargain.

Motor vehicle retailing rose 7.5 per cent or $43 million in May, while fuel sales dipped almost 2 per cent as a result of lower petrol prices.

Total retail sales were up 0.4 per cent, according to Statistics New Zealand, but excluding vehicles and fuel, core retail sales were weak – down 0.2 per cent in the month and 0.6 per cent lower than in May last year.

Wellington department store Kirkcaldie & Stains' managing director, John Milford, said retailing was "very subdued" as there was some nervousness about public sector jobs in Wellington and a mild autumn meant winter clothing sales were slow in May.

"Consumers are being very careful in what they spend. They are retiring debt and saving money. If they don't need to spend, I don't think they are," he said.

The store's normal two-week winter sale starts on Monday and would offer discounts of up to 50 per cent on items such as fashion clothing, rather than the 30 per cent discounts of the past.

"I think we will have a good sale. I think people have a bit of money to spend, but they are not spending it until they think there is a good bargain," he said.

Matthew Foot, dealer principal of one of Wellington's biggest car dealers, Brendan Foot Motors Lower Hutt, said the new-car sales market had been "very strong" for the past 13 months "and growing". Staff numbers had doubled to 70.

There was more interest in smaller, more affordable cars, such as a Suzuki Swift which sells for $18,500 compared with, say, $4000 less for a five-year-old second-hand car. "Used cars have slowed a bit in the past couple of months, but we are moving them," Mr Foot said.

He expected sales to lift ahead of the rise in GST in October, and improve again next year with the Rugby World Cup.

The company sells about 150 new cars a month and 250 in total.

However, Hamish Jacob, chief executive of Capital City Ford and Capital City Mazda in Wellington said new-car sales had been "very tough" since the start of the year.

People were worried about their jobs and were uncertain what they would be left with after the GST rise and tax cuts in October.

"I think [the market] is tougher than last year," Mr Jacob said.

New-car sales were up 20 per cent on the same time last year, although it would be the end of next year at least before the market got back to levels seen before the recession.

New Zealand car sales were the worst hit in the world last year, down about a third.

- © Fairfax NZ News