A “fragile retail environment and reduced consumer spending” nationally hasn’t stopped Kiwi bargain hunters from pumping an estimated $8 billion a year into the pockets of businesses based overseas.
People are being encouraged to pause before pushing pay to global online companies, and a business owner told NZME he believed many online stores were selling products made in third-world countries.
Retail NZ chief executive Greg Harford said New Zealand companies were “competing head-on every day with foreign firms selling online into New Zealand”.
“Many of these foreign firms are very large ... and have significant scale advantages compared to Kiwi firms and enormous marketing budgets to try to win customers. Additionally, depending on where they are located, they may be advantaged by lax employment and environmental laws.”
Harford estimated about $8b a year in NZ retail sales went offshore.
“Pretty much anything is available offshore, and Kiwis are shopping pretty much the full range of products from abroad.”
“That’s enough to apply real competitive pressure in the New Zealand market. The retail environment at the moment is fragile, with many retailers feeling the pinch of higher costs on the one hand and reduced consumer spending on the other.”
This year, according to its latest Radar report, 36 per cent of retailers were not confident, or not sure if they would survive the next 12 months.
It encouraged Kiwis to shop locally and support brands operating here in New Zealand.
“This helps keep the economy going and keeps jobs in New Zealand. Additionally, you will be best protected if you are shopping locally from a business that has to comply with the Fair Trading Act and Consumer Guarantees Act.”
However, Kiwi retailers were doing their best to compete and it had seen a lot of innovation over the past few years as a result.
Iconic Rotorua fashion designer Karl WiRepa said many online stores were selling products made in third-world countries for extremely low prices with maximum retail profits.
In his view: “Not only is New Zealand fashion suffering, the economy is suffering, and people are living in extreme poverty and deprivation because of the consumerism that people ... are supporting.”
The eveningwear couture designer said all of his products and clothing were made in New Zealand - something he was proud of.
WiRepa said New Zealand needed to strategise to become an independent economy, and it could start by adopting new technologies such as automation to increase manufacturing capacity and maintain realistic budgets for production.
He shopped online overseas due to the limited variety of men’s fashion in New Zealand, but said most of his purchases were made in-store at a physical location and he only bought investment items.
“I prefer to touch, feel and try on items. I don’t believe in conspicuous consumption.”
The Incubator Creative Hub director Simone Anderson said internet shopping made it ‘easy to indulge to unimaginable levels’.
It had a focus on consumers being aware and connected to the process through which items are made in comparison to a production line object.
“These products are meaningful, have been inspired by creative thinking, [and are] often hand-made. In the case of artworks, [they] have an authentic story or message, and in examples of fashion, there is a principle of sustainability and landfill rescue behind the garments.
“The blood, sweat and tears have been our own.”
However, Anderson said while there’s an encouraging trend of being loyal to and supportive of artisans and the environment, “the residual impacts of the pandemic and the looming fear of the recession create a decision between financial survival and principles”.
Mary Borman, owner of Tauranga’s High St Boutique, said “You have to tweak your engine all the time”, and it had evolved since opening eight years ago to meet the changing climate.
Its vision was to support high-quality New Zealand labels and those who care for the environment and practice ethical standards. That philosophy still stands for Borman and her daughter, Libby, but they introduced a recycled and vintage clothing section alongside artwork and prints from renowned artists.
“I just keep reinventing myself, and we have completely changed our style of sales.”
Overseas online shopping was a concern, but she hoped to retain her loyal customers by focusing on timeless quality and being different.
Tauranga Business Chamber chief executive Matt Cowley said when people bought online, there was not the instant gratification of having the product in their hands after the purchase.
People bought online because the product was not available in New Zealand or they were looking for a bargain, regardless of how long international shipping takes.
Cowley warned buying from overseas meant people were not protected by NZ’s consumer protection and guarantees law, just the local country of origin’s laws - if it had any.
The Government’s Digital Boost programme had helped many small businesses get an online presence and those who couldn’t afford retail leases, he said.
Data from the Ministry for Business, Innovation and Employment shows it had close to 62,000 active users nationally in July, including 4822 registered users in the Bay of Plenty.
Director of innovation Malcolm Luey said the challenge was not a supposed unwillingness of New Zealanders to support local small businesses, but rather that small businesses need to gain a digital presence so that consumers know they are out there.
“Digital Boost addresses this challenge by offering easy-to-use how-to videos that business owners can learn from to increase their digital capability. It is not just about competing with global heavyweights, but rather working with them and leveraging their expertise to foster the growth of our small businesses and, in turn, our economy.”
First Retail Group managing director Chris Wilkinson said some sites had developed a strong following, particularly from younger consumers, and they were most successful in impulse-type purchases inspired by online browsing.
“People are fascinated by these overseas sites with products they don’t see here, their inspiring pitches and prompts, apparent affordability, often free or low-cost shipping and the seamless transaction process.”
There was little businesses here could do to change people’s behaviour other than develop their own niches and differentiation in areas that were unaffected by commodity-type online merchants.
Towns, cities and communities also needed to play a part in continuing to emphasise the need and value of shopping locally.
“While this won’t recapture all the money flowing out of the country to overseas retailers, it will hopefully get people to pause before they press ‘pay now’ on more nice-to-haves.”
He believed a lot of imported products were destined for the landfill.
Consumer NZ head of research and advocacy Gemma Rasmussen said it regularly received complaints from New Zealanders who’ve had a bad experience after buying something from overseas because the goods are either faulty, don’t match the description or don’t arrive at all.
“We know New Zealanders value price and quality above all else. But when paying for the basics is as hard as it is, it’s no surprise people are tempted by cheaper prices and free delivery offers from overseas. If the price seems too good to be true, be suspicious – it probably is.”
She said people should ignore the sales hype when a website claims the item they’re looking at is “selling out fast” or says there are “just two left” in stock. If people paid by credit card or debit card and things did not go to plan, they could ask their bank for a chargeback.
NZ Post’s eCommerce report for the first quarter of 2023 shows Kiwis were tightening their belts. Its data reveals shoppers spent more than $1.36b on physical goods in the first quarter of 2023, a 22 per cent drop in online spending from the same quarter in 2022.
NZ Post general manager for business Chris Wong said 72 per cent of online spending in quarter one was with Kiwi-based retailers.
“This reflects a desire to support the local economy, the quicker delivery available, and possibly also the money-saving option to click and collect.”
Over the same timeframes, in-store spending had fallen by two per cent to $12.35b. Meanwhile, total retail spending for Q1 2023 – online and in-store – was $13.71b, 4 per cent lower than in Q1 2022, but 5 per cent above Q1 2021.
Carmen Hall is a news director for the Bay of Plenty Times and Rotorua Daily Post, covering business and general news. She has been a Voyager Media Awards winner and a journalist for 25 years.
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