Leap day boosts consumer spending
An extra day for the leap year boosted consumer spending in February, new figures from Worldline show.
Spending at core merchants in February reached $2.88 billion, a 5.3% increase on the second month of the year last year.
But Worldline says these figures were inflated due to the additional day in February this year, and the real annual growth rate of spending was just 1.6% – well below the average annual growth rate recorded over the previous past six months.
Worldline said the adjusted figures showed the retail environment remainedtough, especially for retailers operating outside of the large non-discretionary sectors.
Spending was down for electronics and computer stores, department stores, clothing shops, furniture outlets, appliance stores and retail hardware merchants in February.
Department stores had a particularly weak February, with sales down 26.1%. Sales at electronic and computer stores fell 16.4% with furniture outlets down 6%.
Meanwhile, spending was up on the same month last year at food and liquor stores and chemists.
Spending increases were highest for the West Coast, Otago and Whanganui in February, according to Worldline figures. “Care is required when inferring total market changes ... but the figures do suggest that discretionary spending, especially on large ticket items, is being reduced,” Worldline chief sales officer Bruce Proffit said.
Interestingly, and despite a general pull back in discretionary spending, the figures revealed retailers benefited from Valentine’s Day purchases.
Sales at florist were up 33% on the same day in 2023, while spending at jewellery stores rose 79%. Similarly, wining and dining out at restaurants and cafes was up 54% on February 14, when compared with spending on the same day last year.
Commentator Chris Wilkinson said vendors, especially clothing, footwear and jewellery retailers, were feeling the impacts of consumers having less discretionary income. The level of seasonal sales and discounting painted a picture of just how tough the retail sector was for operators.
“With less money for consumers beyond those core staples of groceries, fuel and of course mortgage or rent payments, there is little left for consumers to be out buying those discretionary items,” said Wilkinson.
“Discounting at the moment is really evident of the changes of season. Some stock hasn’t moved that ordinarily would have through the summer.”
Winter ordinarily brings a slowdown in consumer spending, putting further pressure on retailers to boost their cash reserves for the months ahead.
Wilkinson said the official cash rate staying the same had brought with it some encouraging signs for the sector, and hopes for a stabilisation of inflation.
Retail NZ chief executive Carolyn Young said times remained difficult for the sector despite the slight increase in overall sales in February. “It’s going to be another really tough nine to 12 months.”