New Zealand's Retail Spending Decline Continues - December 2024
Summary of key events:
- Retail spending in NZ dropped by 0.3% in December 2024, marking the seventh consecutive month of decline.
- Christmas shopping was weaker than expected, but late spending on December 23-24 rose by 16.5% compared to 2023.
- Boxing Day sales increased by 11.3%, providing a temporary boost.
- Retailers continue to struggle, with overall card spending down 0.7% and average transaction values decreasing.
- Consumer confidence remains low, with cautious spending patterns affecting the sector.
Retail spending continues to decline in New Zealand, dropping by 0.3%, despite the usual holiday season boost from Christmas shopping and Boxing Day sales. This marks the seventh consecutive month of decline, reflecting ongoing financial pressures on consumers.
Holiday Spending Trends
According to Marketview, December 2024 saw a decline in consumer spending compared to the same month in 2023. This downward trend persisted despite the usual holiday shopping rush, making it the lowest December spending recorded in recent years. While some regions experienced an increase, the overall national figures reflected reduced consumer confidence.
On a more positive note, late Christmas shopping was a defining trend, with December 23rd and 24th witnessing a 16.5% increase in spending compared to the same dates in 2023. These two days alone accounted for 9.1% of the total December spending, up from 7.8% the previous year. This suggests that many consumers delayed their purchases, possibly waiting for last-minute deals.
Boxing Day Sales Provided a Temporary Boost
Despite the broader decline, Boxing Day spending bucked the trend. As reported by the NZ Herald, electronic card transaction data showed an 11.3% increase in Boxing Day sales compared to the previous year. Retailers benefitted from this short-lived surge, but it was not enough to offset the overall downward trajectory in consumer spending.
Regional Differences in Spending
Marketview data highlighted that eight out of sixteen regions saw an increase in spending, with the West Coast leading at a 5.3% rise compared to December 2023. However, major centres such as Auckland and Wellington recorded declines, with card spending dropping by 2.0% in these areas. This suggests that spending strength varied based on location, with urban centres experiencing more pressure than some regional areas.
What does this all mean?
The ongoing decline in retail spending reflects the financial strain many New Zealanders are experiencing. While Boxing Day sales provided a brief relief, the overall trend remains negative.
The data overall supports what we have been telling merchants in 2024 and will continue to raise in 2025, which is that we are still very much in a price-sensitive market. Consumers are looking for good deals to spend their limited amount of money on, and if you’re late in promoting your products around key events, you will miss out on netting sales.
Last year, many merchants started their BFCM promotions as early as November 1st, and we expect to see this trend continue in 2025. At this trajectory, we expect every key promotion event for New Zealand merchants that would normally last 1-3 days such as Labour Weekend and Boxing Day will turn into month long promotions in an attempt to get consumer attention first.
