Spending data for August will reveal the real state of consumer confidence. Photo / Getty Images
Spending data for August will reveal the real state of consumer confidence. Photo / Getty Images
August started off as a good trading month for retailers, but sales took a dive mid-month following Auckland's return to level 3 lockdown.
Retail NZ's latest Retail Radar report reveals more than 68 per cent of retailers throughout the country experienced a decrease in sales following the second move tolevel 3.
But the months prior were strong albeit year-on-year sales overall down.
Data from NZ Post's monthly eCommerce Spotlight report shows that growth in online spending continued even as more Kiwis returned to shopping in physical stores in July.
Spending at offline retailers was up 10 per cent in the month - the second good month of growth for bricks and mortar retailers.
Online shopping in July was up 18 per cent on the same month last year and up 28 per cent through the year to the end of July. More than 71 per cent of all online spend was conducted with domestic retailers in the period.
Approximately 1.3 million New Zealanders shopped online in July, with another almost 20,000 Kiwis shopping online for the first time in the month.
Overall, the increase in online transactions were driven largely by the growth of online grocery and liquor purchases and a big rise in electronics and appliance sales.
Chris Wong, general manager of marketing for the state-owned enterprise, said while the increase in domestic online spend was encouraging, he warned that this could drop and more people look to purchase from overseas merchants in the months ahead as household incomes become squeezed.
"If there is going to be any recessionary economic pressure and people are a bit more constrained with their spending power, we know that people [typically] choose to buy from offshore retailers where price is their first driver," Wong said.
"Over the last seven months, the number of transactions that are happening with offshore retailers has dramatically dropped - declined compared to where it was the year before. As a result the spend in pretty much every category has also declined."
A total of $469 million was spent online in July, $140m at department and variety stores, $170m on food, groceries and liquor and $86m on clothing and footwear.
Spending in the food, groceries and liquor category increased by 44 per cent in the month, homewares, appliances and electronics increased by 42 per cent and clothing and footwear by 10 per cent.
At international merchants, spending within health & beauty dropped 32 per cent in July, clothing and footwear 17 per cent and 40 per cent within stationery goods. Spending within the food and grocery category dropped 21 per cent.
There were 260,000 new online customers shopping in the clothing and footwear category in July - half of those were new customers aged between 40 and 65.
Tuesday was found to be the most popular day for online spending in this country.
The country had began to settle into a "new normal" before last month - but spending trends in August are expected to have again changed following Auckland's two-week period under level 3 restrictions.
During the first nationwide level 3, online as a share of retail growth shifted to $1 in every $4 that was spent was online compared to the typical $1 in every $10.
NZ Post and the banks will later this month release spending data for August which will reveal if the overall retail spend dropped, whether or not transactions remained but shifted to online or if online spend surged to new highs during the second level 3 period.
Another nearly 20,000 Kiwis shopped online for the first time in July. Photo / Supplied
Retail NZ chief executive Greg Harford said he anticipated that online sales did not fall during August despite the move back into lockdown, and that transactions in the online space were fairly steady - perhaps up on volumes over the same time last year.
It was difficult to predict what spending patterns would like for the rest of the year, he said.
"I'm hoping as the country gets back to normal we'll see people getting out and about [again], but the reality is the wage subsidy comes off over the next week or so and we're going to start seeing people throughout the economy lose their jobs. That's going to put some downwards pressure on household spending.
"Yes Christmas is coming, but there is still a lot of uncertainty in the market. I think we will probably end the year with retail spending being less than it was last year."
Harford was surprised at how many retailers based outside of Auckland had been affected by Auckland's move back into alert level 3, but he said overall the sector and spending had come off better than expected despite both periods of lockdown restrictions.
Spending and overall consumer confidence bounced back quickly after the first lockdown, but Harford said it was unlikely the same would happen a second time round.
"The re-emergence of Covid knocked consumer confidence and meant Aucklanders weren't travelling and therefore weren't spending outside Auckland. It also meant customers in other parts of the country were a bit more nervous and hesitant to go out."
