Shoppers reluctant to splurge

CLAIRE ROGERS
Last updated 16:27 08/01/2013

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Retail spending will continue to grow this year but Kiwis are unlikely to let loose in the shops, experts believe.

Data from Paymark, which processes about three quarters of New Zealand's electronic transactions, shows spending rose a seasonally unadjusted 2.3 per cent in December year-on-year, below average.

But on a seasonally adjusted basis, spending was up 4.3 per cent on December 2011. 

Retailers Association chief executive John Albertson said the result was a reasonable outcome given the tough retailing year.

"The year ahead is still going to be pretty tough. But there are signs that things are starting to come right. The housing market in Auckland seems to be going berserk at the moment and there's more energy in the economy."

Early January was a relatively quiet time, with the next spending surge due with the back-to-school sales. 

"The summer sales will be in full-swing at the end of January as well."

The association predicted retail sales growth of between 3 and 4 per cent for 2013.

ANZ senior economist Mark Smith said Paymark data had been quite volatile, with a large lift in November partly unwound in December. 

But the underlying trend seemed to point to a pretty good Christmas for retailers. Seasonally adjusted Paymark figures put spending for the December quarter up 1.7 per cent, after a 0.8 per cent fall in the September quarter. 

"The trend for overall spending is increasing nationwide."

Housing market activity could boost retail spending in some regions - particularly Auckland - but in the longer term the labour market would be the key influence on spending, he said. 

"We continue to see consumer spending remain capped within labour income growth for the next year."

A lot of households also still had high levels of debt. "That combined with a fairly fragile labour market backdrop will continue to encourage caution."

Spending growth would sit around 3 per cent for 2013, he said. 

Albertson said the strong Boxing Day result - Paymark reported a 13.4 per cent spike in sales year-on-year - was a surprise and could partly be due to more stores, such as Kirkcaldie & Stains, deciding to open last year.

Smith said that indicated increasing opportunism on the part of consumers. 

"They're showing a general reluctance to go out and spend, but if the price is right they'll definitely vote with their wallets."

Kiwis spent more at appliance and hardware stores last month (up 10.3 per cent and 9.2 per cent year-on-year respectively), and at liquor retailers, up 8 per cent, cafes and restaurants (up 7.1 per cent) and department stores (up 6.3 per cent).

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A number of homes may have welcomed new four-legged members over Christmas, or treated their existing pets, as spending in pet shops grew 7.5 per cent compared with last year.

Harry McAlpine, manager at Petstop pet store in Newmarket, said Christmas trading had been steady compared with Christmas 2011. Most shoppers had bought presents for their existing pets, such as treats, toys and clothing.

Paymark said transactions increased 3.6 per cent by volume on December 2011.

Paymark sales and marketing head Paul Whiston said transactions through the Paymark network rose 3.3 per cent by value in 2012, and 3.2 per cent by volume.

Paymark processed 932 million transactions last year, totalling $46.5 billion. 

The average transaction value was $49.92 - 0.2 per cent higher than the 2011 average.

"These annual growth rates remain below those recorded before 2008, which is indicative of the slower economic growth since the global financial crisis.

"However one of the promising features of 2012 was the relatively strong finish, with spending through the Paymark network increasing month-on-month in the final three months of the year," he said.

- BusinessDay.co.nz

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