Retailing is bouncing back surprisingly strongly as COVID restrictions ease

Business

Some 45% of retailers report sales are now better than this time last year, Retail New Zealand says, with 78% confident or very confident their business will survive the next 12 months

2nd Oct 20, 9:30am by Greg Ninness

Retailing is making a surprisingly strong recovery as COVID restrictions ease, with many retailers reporting sales levels running ahead of last year, according to industry association Retail New Zealand.

"Reported sales in September were up 19.6% compared to last year, although total sales from March to September are down 2.7%," Retail NZ's latest Retail Radar report says.

"Forty five per cent of retailers reported an improvement on sales compared to the same time last year and a further 19% recorded that sales were about the same.

"This is a significant improvement on last month, which saw sales plummet for the majority of retailers across the country," the report says.

A shift to online trading appears to have helped many retailers.

The report says 77% of retailers are now trading online, with 24% saying they had started trading online since the start of the COVID-19 pandemic.

Sixty per cent of retailers with an online presence reported that their sales were up, compared to just 35% of retailers with in-store trading only.

Retailers' confidence had also bounced back as lockdown restrictions were eased after the recent second COVID-19 outbreaks, with 78% reporting they are now confident or very confident their business will survive the next 12 months, up from 64% a month ago, although 7% are not confident they will survive and 15% think it could go either way.

The report notes Government wage subsidies to keep staff employed had ended in September and said these had been broadly successful.

"Almost all retailers had taken up the wage subsidy and 76% report they had not had to reduce employee numbers, 24% have reduced employee numbers since April 1 and 15% are planning to do so over the next few months," the report says.

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28 Comments

by b21 | 2nd Oct 20, 9:52am 1601585579

Great news for the real economy, my only concern would be how much of this activity is still fueled by public subsidies.

by Advisor | 2nd Oct 20, 10:24am 1601587496

Fair point, although some of the structural changes being made to the system should take care of the economy once public spending is withdrawn.

I am particularly impressed that there's political consensus on apprenticeships for thousands of retrenched workers, in time to get them on the announced infrastructure and housing projects.

by xingmowang | 2nd Oct 20, 9:55am 1601585726

Why surprising? Govt pumped billions into everyone's pocket to spend.

Let's picture the coming situation where there are no international students and visitors, nor governments wage subsidy and mortgage holiday.

by Advisor | 2nd Oct 20, 10:01am 1601586076

Counteracting forces in play are returning residents adding to our population, retrained laid-off workers and Kiwis spending overseas holiday money in NZ.

A Trans-Tasman bubble before Christmas should greatly enhance the bounce back.

by OreoContrarian | 2nd Oct 20, 10:33am 1601587994

"retrained laid-off workers" what will they actually be doing?

by youngdumbandbroke | 2nd Oct 20, 10:36am 1601588169

Man you definitely drank the returning kiwi Kool aid

by OreoContrarian | 2nd Oct 20, 10:41am 1601588516

100% agree with that. The returnees who were not entitled to welfare in their new countries will save us by applying for emergency benefits and accommodation supplement and request to pay for their bond on a private rental.

by EarlyRiser | 2nd Oct 20, 3:38pm 1601606333

And plenty of these returnees are simply using NZ as a safe zone to see out Covid before they will head straight back to where they came from. I was an expat in Asia for many years and a bunch of the Kiwis I knew up there have come back in recent months. Of the 5 I know who have returned, 4 are keen to get out of NZ as soon as they can and one is 50:50 on whether he will stick around or not. All took advantage of free quarantine, naturally.

by OreoContrarian | 2nd Oct 20, 10:47am 1601588831

100% agree - although not everyone's pocket received money - if you have lots of cash you have been screwed. There will probably have to be more welfare dolled out particularly to the debt fueled middle class as they cant survive on the regular benefit.

by Pusheen | 3rd Oct 20, 1:36am 1601642162

As long as your principal cash is there/not being stolen then there's a saying 'cash is ...' haven't heard about Gold bar is ... or .. RE is.. but who knows in the future? - but can't buy your meals or plane ticket or fill up petrol with the rest of those other than cash numbers even in cashless fashion. Our individual view on taking out Debt is shocking for NZ, so much so any govt. can only hope to bail them out stating the sovereign printing money mechanism...we're still in denial stage right now, 2021-23 somehow my crystal ball gazing showing about this ..austerity. Mini $ savings into account need to be drawn for the needs at some points, how about Maxi $ into RE savings? - This negative interest idea a tug of war between RBNZ & Banks, The govt+RBNZ start to posture but will Banks willing to deflate their profit?... let's see.

by Halfway To Paradise | 2nd Oct 20, 12:27pm 1601594840

Not my pocket.

by b21 | 2nd Oct 20, 3:45pm 1601606747

Not quite, it went to pockets of those which companies would have made redundant otherwise but mainly to the few that benefited from QE. The other and most concerning group are those that took mortgage holidays, which worries me is whether this group of people are those spending now since have no mortgages to pay temporary, but who later on will be hit hard by reality.

by CTK | 2nd Oct 20, 10:55am 1601589341

Very interesting just from my household point of view. We haven't spent much at all since lock down. WFH 80% so don't need new clothes, no eat-out lunch or team lunch & less spending on petrol.

by Contrarian | 2nd Oct 20, 11:37am 1601591847

Some Helicopter money, as promised by Judith would give a nice boost to this, prelude to the Chiristmas season. Hope she wins and gives the money quickly.

by Advisor | 2nd Oct 20, 12:30pm 1601595041

National has overstated the net savings to 'average' earners from their proposed tax cuts: https://www.rnz.co.nz/news/national/427213/national-overstates-benefit-… . As per Stats NZ, the average "isn't recommended as an annual income measure" and the median wage is around 53k. FYI median income is lower still due to other means of income such as welfare, pension, etc. being lower than wages in NZ.

Also, the tax cuts won't necessarily have the promised benefits. Those of us who'll receive the largest chunk of the cut i.e. high-earners (on over $100,000 a year) have reportedly become better with their money, cutting spending and boosting savings/repaying loans faster ever since the lockdown was lifted: https://www.stuff.co.nz/business/money/122919614/rich-getting-richer-hi…

Let's call a spade a spade, the tax cut promise is more a bribe than a means to grow the economy!

by refactornz | 2nd Oct 20, 1:26pm 1601598368

National didn't say "median" earners though did they. They said "average" earners so they didn't overstate anything.

Regardless, what was really meant was something like, "middle income earner" which you'd need to represent with a band.
$50K - $80K sounds pretty middle income to me.

by al123 | 2nd Oct 20, 1:36pm 1601599006

Why would that band represent the 'middle' when the median income is basically at the bottom of your band?

by refactornz | 2nd Oct 20, 2:23pm 1601601790

Fair call. Make it $45K - $75K if you prefer. Though those numbers include part-time student workers like my daughter.

Median weekly earnings from wages and salaries: $1,060 /w ($55,120 /y)
Median weekly earnings from full-time work: $1,189 /w ($61,828 /y)

The point is $50K - $80K isn't "High" income. Even Advisor above defines high-earners as "on over $100,000 a year".

by al123 | 2nd Oct 20, 2:44pm 1601603060

Yeah, that seems reasonable. Though I actually think the focus on individual incomes obscures the fact that household incomes are a better indicator of how well off people are in terms of disposable income. A household comprising a couple both on 65k are better off than an individual earning 100k, after taxes and economies of scale (like the fact that housing costs are likely to be the same in both cases) are taken into account. So to me it seems odd to say the latter is better off than the former, because the single person has what's classed as a 'high' income.

by Advisor | 2nd Oct 20, 3:06pm 1601604364

You're absolutely right. It's quite obvious to us but opens a separate can of worms and politicians steer clear of that 'radioactive' conversation.

Correct me if I am wrong, but only the New Conservatives have addressed the household income vs individual income as an issue that needs fixing. They want to reform our PAYE system and introduce a structured filing slab where earners pool their household incomes and pay at rates according to their household size and profile.

The government has been having its cake and eating it too with PAYE being on individual income while means-testing most welfare payments based on household income.
Household finances need a reduction in PAYE for one member when another member loses their job or goes on maternity leave.

by al123 | 2nd Oct 20, 3:23pm 1601605430

That's not quite right, if I understand their policy correctly. They intend to introduce optional income-splitting for couples - so basically, couples get to either be treated as individuals, or split their household income between them for tax purposes.
Does nothing to acknowledge the fact that single people, even those who earn a relatively high income, are often significantly worse off than couples who earn much lower incomes.

by refactornz | 2nd Oct 20, 3:34pm 1601606044

Though many of those couples will also be supporting dependents, so they're not better off. Single people can house share.
Toughest of all is households with a single earner supporting multiple dependents, e.g. a young family. Even $100K won't go far in that situation.

by al123 | 2nd Oct 20, 3:46pm 1601606777

That's why I said 'a household comprising a couple' rather than 'a household comprising a couple and 2 kids'.
And while singles can house share, so can couples. Both need only one bedroom. Unless we are expecting single people to share bunks with strangers well into adulthood and into their pension years.
Agreed though that those who have it toughest are single income + kids households.

by Lanthanide | 2nd Oct 20, 2:47pm 1601603221

Correct they didn't say median. HOWEVER what they did do is deliberately use a definition of "average wage" that makes it look like many people are going to receive a big tax cut, when actually only few people will.

You would know this if you read the linked article, but you didn't. Here's the relevant quote:

Stats NZ statistical data analyst Jessica Honey said the Quarterly Employment Survey which National used to calculate the average income "isn't recommended as an annual income measure".

"It excludes business owners, the self-employed, and industries like farming and NZDF's military branches," she told AAP FactCheck.

"It also represents a pay week in the middle of each quarter, so can miss short-term jobs, while counting people with multiple jobs several times."

Honey recommended using the latest Household Economic Survey data which showed the average income for all those aged 15 and over was $47,048 and the median income was $33,280 (Table 3).

Using this measure, both those on the average and the median income would receive $560 under National's tax cuts.

by Advisor | 2nd Oct 20, 3:17pm 1601605054

Correct. Look no further than this income distribution data published by IRD. (Can't believe Robertson and Ardern haven't used this as a reliable tool to counter National's tax cuts-led economic growth argument).

As per the 2019 data, National's constant use of the average income of $64k and upwards in assessing tax cut benefits leaves out nearly 2 million out of 2.75 million earners (~27%). It's not really a benefit to the 'average' earner when it only caters to roughly the top quartile of earners.

The midpoint of the 2019 data kicks in at 42k, where National's plan delivers $8 a week as opposed to $47 a week at 64k.

https://www.ird.govt.nz/about-us/tax-statistics/revenue-refunds/wage-sa…

by refactornz | 2nd Oct 20, 3:44pm 1601606696

Sorry Lanthanide but that's just not credible. Even the minimum wage comes to $39,312 full-time.

Ask anyone who's earning $60K if they'd classify themselves as a high earner. Unless they're straight out of school the answer will be No.

by Lanthanide | 2nd Oct 20, 2:45pm 1601603116

by Pusheen | 3rd Oct 20, 1:20am 1601641238

We've beaten the crap of Covid a**, we no longer need to flatten the curve, we eliminate them, buried them, so does those crazy OCR, will be buried to negative soon with Covid19, no more monetary prudency, LVR-DTI-CAR-TD guarantee are all pfft, the buzz words now is: QE/LSAP, FLP, Subsidy, Supplement, Leverage, Credit, Spend, Debt. Ignore those prudent savers But 'do be kind' to those willing to take more debt, this country have founded the new ANZAC spirit niche - Debt medal heroes, a martyr that will trickle spending further into debt laden credit spread into wide NZ economy, yea..amazing 'theory and hope' by RBNZ.