GST pre-hike shoppers wait for Labour Day

Photo / Natalie Slade

Expectations of a bumper sales period for businesses ahead of this week's GST rise have been tempered by a still weak retail space and cash conscious consumers holding out for holiday weekend bargains.

Sales in the car industry and retail space had been muted in the lead-up to the increase, however a modest surge in spending on some durables was possible, ASB chief economist Nick Tuffley said.

New Zealand spending on debit and credit cards rose marginally in August, propped up by an increase in non-retail items.

Paymark said it hoped to be able to give an indication of card sales in the week leading up to the GST increase, in the next few days.

Tuffley said the changing face of retail increased the likelihood that some consumers would hold off on big ticket purchases.

"Whilst you might save around 2 per cent, in theory if the GST saving gets passed on by buying before the first of October there is always that reality that we get around to Labour Weekend and someone is offering 10 or 20 per cent off a fridge or freezer or new tv as well."

New Zealand Retailers Association chief executive John Alberton said indications were that a last minute push on stock by retailers promoting 'beat the GST rise' sales had not transpired into a huge rush on sales.

"If you look at the variables that impact on prices, you are probably going to have greater variablity in currency movement. The NZ dollar is probably likely to have more impact on the price of a flat panel TV set than a modest movement in GST."

However it was difficult to quantify the full impact of the hike, given the package of income tax cuts that come into force this Friday.

One major supermarket chain, Progressive Enterprises, is shutting stores for 12 hours ahead of the increase as about 5 million price tickets are swapped over across its stores.

Progressive Enterprises project manager Don Ross said he anticipated the cost of repricing goods across the group to be about $1 million.

The company, which operates Woolworths, Countdown and Foodtown stores, had already slipped price tags behind the old labels, he said.

Stores would be closed by 10pm, opening again by 10am to allow the swapping over of prices, Ross said.

Foodstuffs Auckland general manager of retail Rob Chemaly said the group had made a business decision to keep opening hours as normal so as to not "disadvantage customers".

New price tags were being sent to stores today and the reticketing of items would begin as soon as they arrived, he said.

The company would be communicating the change to customers via posters in store, to eliminate confusion among customers, he said.

"As soon as we start replacing tickets we will put posters up in stores to let customers know the prices they see on shelf won't necessarily the price they will be paying when they get to the point of sale."

"As long as we are clear that the price people will see is going to be a little bit greater than what they pay, I'm sure people will accept that."

The company is due to make another announcement about how the GST increase will impact on its customers, in the morning.

The Warehouse chief operating officer Richard Lewis said the group had been negotiating with suppliers in the lead-up to the increase, in a bid to minimise cost increases to customers.

"There will be some increases but we continue to monitor prices across other retailers to ensure customers are offered continued value for money and low prices in all categories."

BusinessNZ chief executive Phil O'Reilly said a large buy-up by consumers ahead of Friday was doubtful.

"You are seeing so much discounting going on in retail anyway, it's reasonably hard to see how there would be a big buy up. More likely you will see people queuing at petrol pumps the day before," he said.

The GST increase, coupled with a rise in the cost of fuel excise tax, will see the cost of petrol increase by 7c a litre on Friday.