Shoppers cash out
Northlanders’ spending habits add to decline in NZ retail activity
Sarah Curtis
Northlanders are tightening their belts as the cost of living crisis bites.
Shop owners and economists have confirmed an ongoing decline in retail spending in Northland during the past month — reflective of recently released figures showing a downturn in retail spending nationally.
Earlier this week, Stats NZ reported retail spending dropped 1.8 per cent ($20 million) for February, compared to January, despite continuing high prices and a population growth of 2.8 per cent.
Economists pointed to ongoing high living costs and a cooling labour market as reasons for the decline.
Infometrics principal economist Brad Olsen, who grew up in Whangārei, said while the Stats NZ figures don’t give a regional breakdown, he could confirm retail spending in Northland reflected the national trend, which had been tracking downward for a while.
The Stats NZ figures showed the biggest falls were in fuel purchases, down 3.7 per cent; clothing, down 1.5 per cent; and durable household items such as furnishings, down 0.9 per cent.
There was also a drop (2.4 per cent or $55 million) in the non-retail category (excluding services), which includes healthcare, travel, postal and courier delivery.
However, the services category, including repair and maintenance, personal care and funerals, was up $5.1m (1.5 per cent).
Electronic spending had tanked 1.9 per cent or $176m compared to January for retail and the two non-retail categories.
NorthChamber president Tim Robinson, co-owner and director of Bernina Northland Sewing Centre, in Whangārei, said he had experienced first-hand a significant decline in customers for about six months. There were multiple reasons for it including, of course, the current closure of the Brynderwyns.
Several local retailers had also commented to him that their shops were currently “as dead as a doornail”, with so few of the usual interruptions that staff were able to take time off and have full lunch breaks, which was previously unheard of.
While some commentators were predicting the days of small retailers were numbered, Robinson thought otherwise. He agreed with a public statement this week by Mark Presnell, managing director of Convergence, an Aucklandbased e-commerce integration firm, that small retailers were well-positioned to thrive in the coming years.
Presnell said emerging new technology and shopper values supported small retailers — unlike the retail middle, which would do it tough.
Mid-sized retailers “often lack the scale of megastores and the customer focus of smaller businesses, leaving them vulnerable to changing consumer behaviour and rising overheads”, Presnell said.
The demise of the impersonal middle ground, Presnell said, stemmed from a failure to adapt to the online landscape. Many brick-and-mortar stores prioritise their physical presence at the expense of their online operations, resulting in outdated product listings, inaccurate pricing, stock discrepancies and poor customer communication.
“This inconsistency breeds frustration for shoppers who want a seamless experience, ultimately driving them back to the convenience and reliability of larger online platforms, or the more tailored service of smaller retailers.
“Smaller businesses can now expand beyond, for example, Invercargill and go national, if not global — they have lower
overheads and offer a more intimate experience.
“The future of retail belongs to those who adapt and innovate.
“By embracing technology, prioritising customer service and building strong online presences, small retailers can not only survive but flourish in the years to come,” Presnall said.
Robinson said he was confident his business had diversified enough to hold its own.
“It’s just about keeping moving, adapting, and responding to what customers think they might want that keeps you valuable in their eyes but also makes you attractive to do business with,” he said.
Customers sometimes commented they could buy the same products cheaper online but they did so without considering what they would have to pay for freight, Robinson said.
Asked which sectors in this region were feeling the decline in spending hardest compared with the categories specifically identified in the national statistics, Robinson pointed to house construction.
“And if you think what the flowon effect of that is, it’s actually quite significant because it’s not just the chippies themselves, it’s all the supported contractors, and if those guys aren’t busy that’s a pretty big ecosystem of employment and income that’s being affected.
He believed interest rates would remain high for the next 12 to 18 months, which meant there was still “a lot of pain to be had out there”.
He understood there was a significant cohort of people on low home-loan interest rates of 3 or 4 per cent who would have to refix within the next six months for new rates of 8 or 9 per cent.
“That’s a dramatic increase in their fortnightly or monthly cost and it’s money that just suddenly won’t be spent elsewhere.”
Even some of the city’s op shops report a similar drop in spending.