Northland parents Jordan Pattison (left) and Vernon Forster, pictured with daughter Layla-Rei, 3, say they're spending more carefully - even on family events like birthdays and Easter - amid the nation's ongoing cost of living crisis. Photo / Michael Cunningham
Northlanders are tightening their belts as the cost of living crisis bites.
Shop owners and economists have confirmed an ongoing decline in retail spending in Northland during the past month - reflective of recently-released figures showing a downturn in retail spending nationally.
Earlier this week, Stats NZ reported retail spending dropped 1.8 per cent ($20 million) for February, compared to January - despite continuing high prices and a population growth of 2.8 per cent.
Economists pointed to ongoing high living costs and a cooling labour market as reasons for the decline.
Infometrics principal economist Brad Olsen, who grew up in Whangārei, said while the Stats NZ figures don’t give a regional breakdown, he could confirm retail spending in Northland reflected the national trend, which had been tracking downward for a while.
The Stats NZ figures showed the biggest falls were in fuel purchases, down 3.7 per cent; clothing, down 1.5 per cent; and durable household items such as furnishings, down 0.9 per cent.
There was also a drop (2.4 per cent or $55 million) in the non-retail category (excluding services), which includes healthcare, travel, postal and courier delivery.
However, the services category - including repair and maintenance, personal care and funerals - was up $5.1m (1.5 per cent).
Electronic spending had tanked 1.9 per cent or $176m compared to January for retail and the two non-retail categories.
NorthChamber president Tim Robinson - co-owner and director of Bernina Northland Sewing Centre, in Whangārei - said he had experienced first-hand a significant decline in customers for about six months. There were multiple reasons for it - including, of course, the current closure of the Brynderwyns.
Several local retailers had also commented to him that their shops were currently “as dead as a doornail”, with so few of the usual interruptions that staff were able to take time off and have full lunch breaks, which was previously unheard of.
While some commentators were predicting the days of small retailers were numbered, Robinson thought otherwise. He agreed with a public statement this week by Mark Presnell, managing director of Convergence - an Auckland-based e-commerce integration firm - that small retailers were well-positioned to thrive in the coming years.
Presnell said emerging new technology and shopper values supported small retailers — unlike the retail middle, which would do it tough.
Mid-sized retailers “often lack the scale of megastores and the customer focus of smaller businesses, leaving them vulnerable to changing consumer behaviour and rising overheads,” Presnell said.
The demise of the impersonal middle ground, Presnell said, stemmed from a failure to adapt to the online landscape. Many brick-and-mortar stores prioritise their physical presence at the expense of their online operations, resulting in outdated product listings, inaccurate pricing, stock discrepancies and poor customer communication.
“This inconsistency breeds frustration for shoppers who want a seamless experience, ultimately driving them back to the convenience and reliability of larger online platforms, or the more tailored service of smaller retailers.
“Smaller businesses can now expand beyond, for example, Invercargill and go national, if not global — they have lower overheads and offer a more intimate experience.
“The future of retail belongs to those who adapt and innovate.
“By embracing technology, prioritising customer service and building strong online presences, small retailers can not only survive but flourish in the years to come,” Presnall said.
Robinson said he was confident his business had diversified enough to hold its own.
“It’s just about keeping moving, adapting, and responding to what customers think they might want that keeps you valuable in their eyes but also makes you attractive to do business with,” he said.
Customers sometimes commented they could buy the same products cheaper online but they did so without considering what they’d have to pay for freight, Robinson said.
Asked which sectors in this region were feeling the decline in spending hardest compared with the categories specifically identified in the national statistics, Robinson pointed to house construction.
“And if you think what the flow-on effect of that is - it’s actually quite significant because it’s not just the chippies themselves, it’s all the supported contractors, and if those guys aren’t busy that’s a pretty big ecosystem of employment and income that’s being affected.
He believed interest rates would remain high for the next 12 to 18 months, which meant there was still “a lot of pain to be had out there”.
He understood there was a significant cohort of people on low home-loan interest rates of 3 or 4 per cent who would have to refix within the next six months for new rates of 8 or 9 per cent.
“That’s a dramatic increase in their fortnightly or monthly cost and it’s money that just suddenly won’t be spent elsewhere.”
Meanwhile, even some of the city’s opportunity shops report a similar decline in customer spending.
The Northern Advocate this week asked customers at Whangārei’s Okara Park Shopping Centre how their spending habits had changed in line with the cost of living crisis.
Jordan Pattison and Vernon Forster are parents to two preschoolers and a 7-year-old.
Jordan said a bike they’d just bought was for their oldest child’s birthday but he would have to share it with his next-oldest sibling.
They had hoped to buy baskets and give their kids an Easter egg hunt this year but abandoned the idea after facing unexpectedly high prices and realising it would be too expensive.
Family and friends were also struggling, Jordan said. Someone she knew owned a business and was finding times tough while consciously trying to keep prices low for locals.
Friends Madeleine Fanene Vogt and Joy Sadler - pensioners who volunteer at Citizen’s Advice - said the surge in fuel prices had led to them car sharing as much as possible. Joy, who lives rurally, said she now only made trips to town when it was necessary.
A keen gardener with lots of fruit trees, she’d made an extra effort this year to ensure all the produce was preserved, with nothing left to waste. Her health-conscious husband used to favour buying organic produce but recently he’d been inclined to buy the less expensive options.
They didn’t go to restaurants as much, either. The cost of dining out had shot up since the Covid lockdown and was now too prohibitive, Joy said. Paying $18 or $19 for an in-season avocado smashed over two pieces of toast was “nuts”.
Madeleine noted her favourite coffee pods had increased from $9 to $12 in the past four years, her power costs were up $40 monthly, and ratepayers were now facing an increase of more than 17 per cent for the next financial year.
Once a happily “compulsive” supermarket shopper, she now took advantage of free delivery services and reigned in impulse purchases by ordering online and only what she needed. She refused to buy her fruit and veges from supermarkets anymore and was instead getting them from Whangārei’s Saturday produce market.
The friends both said they now shopped widely online, finding outlets like Temu far cheaper than even local franchises of budget-brand retailers. Many online outlets also offered convenient free returns.
Maungatapere farmer Luke Schimanski was conscious of the role overseas conflicts were having on rising food prices in particular. He tried not to buy dog tucker any more - it was too expensive. Even dog bones were expensive, he said. Fortunately, he was a keen hunter and his dogs loved possum meat so he now relied on it for their food.
Schimanski said he believed many New Zealanders were guarding their spending as they “wait to see” what the recent change in Government holds.
Sarah Curtis is a news reporter for the Northern Advocate, focusing on a wide range of issues. She has nearly 20 years’ experience in journalism, much of which she spent court reporting. She is passionate about covering stories that make a difference.
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