KEY POINTS:
Dismal business confidence and activity figures released from the Institute of Economic Research saw equally dire headlines such as "It's worse than we thought".
A few weeks earlier electronic transactions provider Paymark announced a record-breaking Christmas Eve and Boxing Day for retailers across the country. However this was
an intense and short-lived ray of sunshine.
Christmas Eve was always going to be big for a number of reasons. With consumer confidence waning, people were holding on to their money for as long as they could; others squeezed by living costs were waiting for that final pay cheque to be banked. With Christmas Day falling late in the week, people naturally waited it out.
Boxing Day was a little trickier to predict. Given so many retailers went into sale mode before Christmas, it was hard to know just how big the annual sales were going to be.
As it turned out, Boxing Day itself was up on any previous year, but trade didn't linger like it has done in the past. After December 26 the numbers fell relatively quickly.
Overall, any surges the retail sector witnessed in December and so far in January have largely been in volume more than in value.
"Shoppers do it little and often" was one headline that aptly described the situation of New Zealanders not being able to kick the shopping habit. In the past few months it seems Kiwis have opted to spend less rather than put their Eftpos cards away entirely.
By all accounts 2009 will be a much tougher animal.
However every town and country will be affected differently.
I believe Wellington will be cushioned from the worst effects of an economic recession - already the statistics are showing that to be the case.
Paymark reported that for the first 11 days of January retail spending was up in Wellington but down in Auckland compared with the same period last year.
Likewise Wellington was leading the cities in the lead up to Christmas and Boxing Day.
Wellington will weather the recession better than most centres simply because it is home to 36,000 public servants. The pay cheques keep rolling in for these people with most of them well remunerated and retaining good job security.
Having a public service that rivals the population of Wanganui is a good base for the Wellington economy but it is one that is unlikely to see substantial growth, particularly under the National Government.
However the Auckland region will reach two million people in the next few decades. That unprecedented population growth gives Auckland an underlying long-term confidence other centres are not guaranteed. If Auckland is down it won't be for long because demand for its products and services will again swell as its population does.
However in challenging times like these you can't help but wonder why Auckland ever relinquished its capital city status in 1865. Then again Auckland has long been a city of commerce, enterprise and risk-taking.
Having an army of public servants wandering the streets is not really Auckland's style.
With all the doom and gloom intensifying so early in the New Year it's important to keep in mind that retail is coming off a high base. Overall, annual retail spending across the country has gone from about $38 billion to $66 billion in the past decade.
Yes, more competition has appeared on the scene and yes, inflation accounts for some of that rise, but that is still considerable growth.
Since the Asian economic crisis of the late 1990s, retail spending grew every year until we saw the brakes starting to come on in the middle of last year.
Interestingly over the past six months Statistics New Zealand has not reported any overly dramatic declines in the country's spending, with the exception being the motor vehicle category. However 2009 is only young.
While Paymark can report on the value and volume of retail spending, they can't account for retailers' profit margins which have been seriously dented in recent months.
Operational fixed costs have shot up, importing has been more expensive due to the low dollar and pedestrian counts are down across Auckland due to more retail competition and falling consumer confidence.
The retailers that come out of this economic storm will largely be the ones who have used the past decade to invest time and effort into their business, product and customers.
Good customer service doesn't necessarily cost a retailer anything more, but it is key to converting a busy shop into a successful business.
What's more, great customer relations are critical to retaining customers and much cheaper than advertising to attract new ones.
Retailers who invested in their brand, staff and customers when times were good will be in better shape over the next 12 months compared with those who have taken the good times for granted.
The past decade has been a great opportunity for any business or organisation to build a strong platform. That's been our strategy in Newmarket. We have worked hard to cement Newmarket as the leading shopping district, knowing that one day it was going to get tough.
Building and talking up Newmarket in the good times didn't carry a lot of value but it means we're now going into 2009 as a solid proposition with leading name recognition. Smart individual businesses will have applied a similar strategy.
* Cameron Brewer is general manager of the Newmarket Business Association.
