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New retail sales data for New Zealand has some in Rotorua worried customers are "massively reducing" non-essential spending.
Figures released from Stats NZ show retail sales had dropped for the March 2022 quarter by 0.5 per cent compared to the December 2021 quarter.
However, people were spending more.
In theBay of Plenty, retail sales values increased 5.5 per cent ($1.785 billion) in the March quarter compared to the December quarter.
Rotorua Business Chamber chief executive Bryce Heard said the data confirmed what he had been hearing: "Year on year the December quarters have shown steady growth with significant holes occurring at each Covid-19 lockdown."
Heard said it was concerning there appeared to have been a significant rise in essential-services spending such as fuel, pharmaceutical and supermarket expenses.
"This no doubt reflects rising costs of essentials, but it is being funded by the consumers massively reducing their discretionary spending on things like vehicles and new houses."
Nicholson Automotive Rotorua dealer principal Hamish Evans said "it's a challenging world at the moment".
Stock restraints, part supply issues and international struggles with Covid-19 meant trade had been a mixed bag, he said.
Rising interest and inflation meant prices were going up and people were more hesitant about buying. This impacted both new and used vehicle sales as sales in the former affected stock for the latter, he said.
An increase in people visiting Rotorua CBD has been seen over recent months. Photo / Laura Smith
"A car is not necessarily high on the list of priorities."
Bringing stock into the country was also a challenge as importers worked with new clean vehicle standards and the war in Ukraine forced fuel prices up.
As an example, bringing a ute to the country was now $900 more in logistical costs, he said.
Evans said winter would be "interesting", particularly with the postponement of Fieldays 2022. But he expected improvement within the next year.
This would help to put money back into the local community and he asked people to shop local to support businesses.
Okja Kim has owned her Tutānekai St souvenir shop, Three Tikis Souvenirs, since 2005.
Three Tikis Souvenirs owner Okja Kim. Photo / Laura Smith
Things were slowly getting better over the last few months, after a particularly quiet end to summer. March this year compared to last showed only a $300 increase, she said.
Despite this, sales had more than doubled in the previous two months on what they were in March, with profit increasing from days of $70 to $800.
Kim said things had been tough - the monthly total was still thousands of dollars short of what income was pre-Covid-19 pandemic - but these days there were more people in town and more tourists.
"I feel positive. I have optimism now."
Rotorua's Gardeners Landscape Supplies owner Roger Short reckoned things had been going pretty well all year.
Covid-19 had actually been good for business, with lockdowns and time at home had people looking to complete their home improvement projects, he said.
While there had been some supply issues, such as a shortage of bark, Short took challenges on as they came his way, he said.
When it came to inflation and the cost of living crisis he said he needed to keep pace as the costs could not be absorbed. But he said this had not slowed business.
"They comment but they still buy it."
Vege gardens in particular had been popular of late, as people looked for a family activity to do together. Short said gardening was new to many of them.
Retail NZ chief executive Greg Harford said retail was a "mixed story" at the moment.
"Some retailers are doing relatively well in terms of sales, while others are struggling.
"Customers are tending to stay home and shop locally rather than getting into CBDs.
"At the same time, many customers are making fewer trips, meaning that they are spending more each time, although as inflation bites, they are starting to trade down in terms of brands."
Harford said it was important to note that increased sales didn't necessarily translate into more profitable retail stores.
He said retailers face "very significant" expense pressures, such as the "spiralling costs of sourcing product, freight and wages".
