Petrol hike hurts retailers

NIKO KLOETEN
Last updated 14:02 05/08/2014

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A $4 billion increase in spending on petrol has hurt retailers more than online shopping, new research suggests.

A researcher for consulting firm RCG, John Polkinghorne, has examined fuel-spending trends and their effect on consumer behaviour.

He found that petrol station sales have gone from $3.8b a year to $7.8b in the past 10 years - a 105 per cent increase.

The doubling in petrol station spending had occurred despite New Zealanders driving less and using less petrol.

"Retailers should be very aware that money spent on petrol is money that can't be spent on discretionary items," he said. "Ultimately, this percolates through the whole economy.

"It's worth pondering how much disposable spending has 'gone up in smoke' rather than into investments, savings or shop tills."

Polkinghorne said higher petrol prices were hurting retailers more than online spending.

Nielsen research found that New Zealanders spend about $1.3b a year on overseas online purchases.

"Internet shopping gets plenty of media attention, but that extra $4b spent on fuel has certainly been a bigger drain on the economy and on retailers' profits than the internet," Polkinghorne said.

"In fact, higher petrol prices can be a 'push' factor to get more people shopping online. You no longer need to drive around every shop in town to find the best deal."

He said transport was the third-biggest household expense behind housing and food.

He found that households in the Auckland region spend an average of $4500 a year on petrol.

He said retailers needed to adapt to the increasing amount of money being spent on petrol.

"I think for starters it's a good idea for retailers to be well-located," he said.

"Places that are accessible make it easier to get to. They need to be accessible via road, but also public transport."

Polkinghorne said the market was likely to place a growing premium on location for retailers.

"You'd expect rents to increase in areas with retail nodes or hubs with a good shopping offering where people can go and do multiple shops at once, rather than having a shop in the middle of an industrial area," he said.

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