January retail sales increase not true picture of sector

AUCKLAND: National retail sales were up 13.5% in January on data from a year earlier, but the positive figures may not show the realities of the wider sector.

Industry yearonyear total sales since March 2020 are up 6.4%.

The positive growth figures represent the eighth consecutive month of increased sales throughout the sector since the onset of the coronavirus pandemic last year.

Retail sales took a dive in March 2020 and plunged further in April, but overall sales began to recover in May and returned to growth territory from June. Sales have gone from strength to strength since then, which analysts and economists pin on captured spend due to the indefinitely closed borders and a strong housing market.

While the latest Retail NZ sales index data was encouraging and could perhaps be interpreted as the industry having undergone a recovery, Retail NZ chief executive Greg Harford said the figures did not show how many retailers were still struggling.

‘‘Our sense is that [trading] is going very well for about threequarters of retailers, but there are a quarter of businesses that really aren’t firing in the way that they need to if they are going to survive,’’ Mr Harford told the Herald.

Retailers focused on servicing the tourism market located in international tourist hotspots, and those located in central business districts in major cities, were among businesses struggling.

‘‘One small business member we spoke to the other day received literally $25 in sales during a day,’’ he added.

Retail NZ estimates that thousands of retail businesses were in a similar situation.

For the majority of the sector, the organisation forecasts that spending will continue in the months ahead as demand for goods remains elevated.

Electronic card spending in December rose 3.5% by $250 million when compared with December 2019 figures, while core retail industries rose 4.8% by $305 million.

The spend on durables was up 6.7% or $145 million in the month, consumables up $188 million or 7.5% and apparel up $38 million or 8.2%. Sales of motor vehicles rose by $19 million or 9.6% in the comparable period, while the spend on hospitality fell by 5.3% or $66 million.

Electronic card spending, including the two nonretail categories, was up $169 million or 1.8% compared with December 2019.

Seasonally adjusted estimates showed a 4%5% pullback in monthly retail card spending in December. — The New Zealand Herald