Retailers in New Zealand remain cautiously optimistic about their survival prospects in 2025, despite weaker-than-expected sales over the Christmas trading period, according to the latest Retail Radar survey from Retail NZ.
Retail Confidence on the Rise
The quarterly survey, which tracks retailer sentiment and business performance, found that 70% of respondents were confident or very confident that their business would survive the next year. This represents an increase from 65% in the previous quarter (July-September 2024), continuing an upward trend in business confidence.
Retail NZ Chief Executive Carolyn Young noted that factors such as stable inflation at 2.2% over the past two quarters, potential reductions in the Official Cash Rate, and the government’s emphasis on economic growth may be contributing to increased confidence among retailers.
Sales Performance Falls Short of Expectations
Despite improving confidence, retailers faced a difficult end to 2024. Statistics NZ reported that total retail sales in December 2024 fell by 1% compared to the same period in 2023, equating to a decline of approximately NZ$80.4 million in spending.
The Retail Radar for Q3 2024 had shown that 57% of retailers expected to meet or exceed their Q4 targets. However, actual results were mixed: while 45% of businesses met their targets, only 17% exceeded them—though this was significantly higher than the 5% who had predicted they would do so.
Key Challenges and Priorities for Retailers
Retailers continue to face persistent economic pressures. Inflation and the rising cost of living remain the most significant concerns, cited by 73% of respondents. Additionally, insurance cost increases (53%) are adding financial strain.
Looking ahead, 30% of retailers said that improved consumer confidence would be essential to their success in 2025, while 17% highlighted the need for lower inflation. A further 14% identified merchant surcharge fee legislation as a priority for their business.
Cautious Forecasts for Early 2025
Retailers remain cautious about the first quarter of 2025. Nearly half of those surveyed were neutral about the outlook, while the rest were evenly split between positive and negative expectations.
“Retailers are cautious on sales in the first quarter of the year, with only 3% expecting to exceed their sales targets,” said Ms Young. “Improved consumer confidence is vital to retail sales. Until consumers feel confident about their job prospects, ongoing stable levels of inflation, and interest rates easing, they will continue to be cautious about discretionary spending.”
In response, some businesses are adjusting stock selections to reflect consumer demand, while others are investing in digital platforms. Some business owners are also working additional unpaid hours to sustain operations.
“However, some retailers are doing well,” Ms Young added. “The key is remaining agile and ensuring their business meets the current market environment, as well as looking at how to reduce costs.”
The full Retail Radar report is available at Retail NZ’s website.
