Stats NZ figures show that seasonally adjusted retail sales by volume decreased by 0.1% in the September quarter, but the figures were down 2.8% on the volumes recorded for the same quarter in 2023

Retail activity was basically flat in the September 2024 quarter, according to Statistics New Zealand’s latest retail trade survey.

The total volume of seasonally adjusted retail sales was $24 billion, down 0.1% in the September quarter compared with the June quarter.

On a yearly basis, the September quarterly volume figures were down a further 2.8% on the comparable figures for the September 2023 quarter. 

Retail activity had picked up in the March quarter earlier this year, rising 0.5%, but fell 1.2% in the June quarter. This extended the sales decline the sector has been experiencing over the past two years.

Stats NZ said the largest contributors to the fall in retail sales activity during the September quarter were supermarket and grocery stores which fell 1.3%, and food and beverage services, down 2.1%.

“Retail activity was flat in the September 2024 quarter, with a decrease in spending in most retail industries being offset by an increase in motor vehicles and electrical and electronic goods,” economic indicators spokesperson Michael Heslop said.

Of the 15 retail industries, 10 had lower retail sales volumes in the September 2024 quarter, compared with the June 2024 quarter, after adjusting for price inflation and seasonal effects.

Stats NZ said the largest movements in sales volumes during the September quarter were in the following industries:

• motor vehicle and parts retailing – up 4.3%
• electrical and electronic goods retailing – up 4.6%
• supermarket and grocery stores – down 1.3%
• food and beverage services – down 2.1%
• department stores – down 2.5%

On a retail sales value basis, the largest industry movements in the September quarter were:

• fuel retailing – down 6.1% or $150 million
• motor vehicle and parts retailing – up 3.3% $124 million
• food and beverage services – down 1.9% or $75 million
• accommodation – down 3.1% or $40 million
• department stores – down 1.5% or $25 million

Stats NZ said the total value of stock held at the end of September 2024 came to $9.4 billion, which is 1.9 % lower (or $177 million) compared to a year earlier in September 2023.

The industries that had the largest stock value movements were motor vehicle and parts retailing, down 5% or $109 million and hardware, building, and garden supplies, falling 3.4% or $50 million.

Retail NZ Chief Executive Carolyn Young said the next few weeks for retailers would be “critical” as key sales periods start, including the Black Friday sales and Christmas promotions. 

“Many retailers rely heavily on strong sales during this period to ensure they have a buffer for quieter months. The turnaround in the economy can't come soon enough for the retail sector,” she said.

Subdued demand

Westpac senior economist Satish Ranchhod said retail spending wasn’t as soft as the bank had expected in the September quarter and Westpac expects it to be the “low point” for retail sales. 

Sales had been trending down over the past year as households wound back their spending in response to increases in living costs and high interest rates, he said.

Ranchhod said it would take time for the full impact of the Government’s tax cuts, inflation dropping back and interest rates falling to “pass through” to households’ back pockets and boost spending again. 

“Against that backdrop, we expect to see retail spending gradually pushing higher as we go into the holiday shopping season, with a more meaningful rise expected through mid-2025,” he said.

ANZ economists Henry Russell and Miles Workman said the latest retail trade survey data showed there was still very subdued consumer demand and a soft domestic economy.

“Looking ahead, while the tailwind from lower interest rates is expected to support a recovery in retail sales moving forward, it won’t be instant,” they said.

“Overall, the level of retail spending remains very soft, but the downward trend that has been in place since late 2021 looks to be finally arresting. That said, a meaningful recovery in retail spending is unlikely until 2025.”