Shopper confidence falls

KEY STATISTICS
Gross Domestic Product declined 0.3 percent in the March 2008 quarter
The Consumer Price Index rose 0.7 percent in the March 2008 quarter
The Warehouse Group revised its expected annual after-tax earnings down by about 10 percent because of a marked downturn in consumer spending
Briscoe Group slashed its forecast half-year net profit
Consumer confidence at 20-year-record low nationally, and recording its biggest fall in the wider Nelson region.

Consumer confidence has plummeted in the Nelson region, but retailers insist shoppers are still spending and keen to make the most of winter bargains.

According to the latest Westpac McDermott Miller Consumer Confidence Index, the Nelson-Marlborough-West Coast region recorded the country's largest drop in consumer confidence over the last three months.

The region has gone from having the country's highest level of shopper confidence in March, at 101.5 index points, to having one of the lowest in June, at 77.5.

Nationally, consumer confidence also took a dive, falling 15 points to 81.7 in June - the lowest level since the recession of 1991.

The survey asks consumers about their spending habits and expectations for the economy. Scores below 100 show more pessimism than optimism.

An even grimmer picture was painted with Statistics New Zealand figures late last week, which showed the economy shrank 0.3 percent in the March quarter, partly because of drought-hit farming and a fall-off in building.

Westpac chief economist Brendan O'Donovan said the drop in consumer confidence in some regions was a surprise because of their strong commodity focus, particularly dairy. However, high-profile job losses at companies such as Sealord, Fisher and Paykel and Carter Holt Harvey would have had an impact.

Nelson Regional Economic Development Agency chief executive Bill Findlater agreed the 323 redundancies at Sealord would have "moved people's confidence around".

However, he did not think low consumer confidence was a problem.

"If you look at where we were in March, we were the highest."

There had been a lot of negative talk about fuel prices and the economy recently, he said.

"I don't actually share that negativity about our region."

Mr Findlater said the region had been "weathering difficult times" for a while because 31 percent of the region's industries were based on export and tourism, which had been affected by the high New Zealand dollar.

However, improving prices for pipfruit were working in Nelson's favour, he said.

Despite sale signs appearing in many stores throughout the region during recent weeks, shoppers and retailers spoken to by the Nelson Mail were remaining upbeat.

Sherry Mirfin, coordinator of the Uniquely Nelson marketing body, said many businesses were holding sales to shift winter stock before new-season goods arrived and she did not think there were any more this year than at this time in previous years.

"Nelson has got a summer-winter economy. It is always quieter in the winter than it is in the summer," she said.

Mrs Mirfin said there was a "desperate need" for a conference centre in Nelson to attract visitors throughout winter. "Everyone benefits - accommodation, taxis, retailers and cafes."

From Tuesday, the organisation would be running its annual promotional month involving its retailer members to attract shoppers into Nelson during winter by offering sales and prize packages, including a trip for two to Hawaii.

Gustaves owner Gus Beullens said while he had noticed less pedestrian traffic during recent weeks, customers who did buy seemed to be spending more.

"Overall, I think customers are still positive."

Some spending figures back up his observations, indicating customers are spending more in stores.

The latest figures from Paymark, which processes 75 percent of New Zealand's electronic retail transactions, show that $67 million was spent in Nelson during May, 9.9 percent more than in May the previous year.

Richmond Mall manager David Hill said the mall was not noticing a drop in shopper confidence, with mall turnover continuing to grow at about 6 to 8 percent a year.

Mr Hill said mall management had no control over the timing of shops' sales, which varied between stores.

"Interestingly, the time of the sales this year is almost exactly to the day as it was last year."

United Travel Nelson managing director Jenny Jackson said staff at the store were "extremely busy".

- © Fairfax NZ News