Record retail Christmas spending projected, but retailers face mounting pressure

Retailers are hoping for a big Christmas - but face increasing pressure from online stores. Photo / 123RF

Retail NZ is estimating Kiwis will spend a record $17.4 billion this Christmas, but retailers are facing mounting pressure.

Festive spending in the lead-up to Christmas is important for many retailers looking to make money, but competition from large offshore online retailers poses a great risk, Greg Harford, Retail NZ general manager for public affairs, said.

"Despite the likely increase in spending, it's not all rosy for retailers," Harford said.

"Across the sector, retailers face strong competition from each other domestically, as well as from global websites that have massive scale. While spending will likely be up over the next couple of months, margins are under pressure, economic uncertainty is likely to put pressure on consumer spending, and many retailers are struggling to hit their sales targets."

Online spending is likely to peak in November, Harford said.

"We estimate Kiwis will spend a total of $17.4 billion over the next two months across all retail categories, up around five per cent from last year," Harford said.

November and December are busy months for New Zealand retail, Harford said, but consumers opting to shop online at Amazon, ASOS and Boohoo and others could dent profits for local retailers.

"Smaller retail businesses especially rely on a strong Christmas to sustain their businesses through the year, so it's really important for the sector that the season goes well," Harford said. "We're expecting uplifts in consumer spending, especially on clothing, sports and leisure, homeware, accessories and food and drink."

Last year Kiwis spent almost $6b in electronic card transactions in December alone, up 6.6 per cent from the previous year. Electronic payments company Paymark recorded the total value of transactions for the month at $5936.8b.

The highest spend overall for December last year was in Auckland-Northland, recorded at $2.4b.