Retail staged something of a recovery last year, albeit an unevenly distributed one that’s difficult to enjoy
Shopping mall owner Kiwi Property announced that 2022 had seen record sales of just under $1.7 billion across its large “mixed use” shopping centres, which include Auckland’s Sylvia Park and LynnMall and The Base in Hamilton.
The $1.7b figure (which excluded the results of its smaller Northlands, The Plaza and Centre Place malls) was 26 percent higher than what it recorded in 2019, its last year of trading not severely affected by the pandemic.
The significant expansion of Sylvia Park a few years ago probably accounts for the increase in sales.
Those properties also bucked a wider trend of retail card spending in New Zealand during December, with customers spending $200 million in the month.
According to Stats NZ, retail card spending in December, the busiest shopping month, fell 2.5 percent (seasonally adjusted) or $166m compared with November, the first drop in nine months.
Retail NZ chief executive Greg Harford said in the wider retail sector there had been growth in dollars being spent throughout 2022, but it hadn’t been keeping pace with inflation meaning that in real terms, spending was declining.
“Through the last quarter of 2022, two-thirds of our members reported missing sales targets for the period.
“It’s not all doom and gloom, but there’s a lot of headwinds out there and there’s not massive confidence or expectation that sales growth will continue.”
With at least some of Kiwi Property’s tenants making hay, how important is location?
“We’re certainly seeing that suburban malls are doing better than CBDs, particularly in Auckland and Wellington, [where] there’s real challenges on Queen St and central Wellington.”
New Zealand spending compared to the previous year
Heart of the City’s Viv Beck, a staunch supporter of Auckland’s CBD retail, said after enduring “the eye of the Covid storm”, that Auckland Central retail spend had been steadily growing since the border opened.
Heart of the City’s numbers for the December quarter were yet to be finalised, but December was up 7 percent on November and up 30 percent on December 2021.
The month was 82 percent of what Auckland CBD experienced in 2019.
“The other important indicator is our hotel occupancy is up. We had one week in December where the sales were on par with 2019. It’s a lot brighter picture than it was.”
International spend, particularly with the return of cruises, is sitting at around the same level as it was pre-pandemic at 20 percent of total spend.
With rising interest rates and just over half of all mortgages rolling over this year, discretionary spend will no doubt take a hit.
BNZ’s chief economist Mike Jones recently told Newsroom that running the numbers on a half-a-million-dollar mortgage, you’d potentially have households with an extra $300 or $400 a week coming through on their mortgage bills.
“There are not many household budgets that can accommodate another $300 or $400 weekly without something else having to go.”
Jones expected retail to be one of the worst hit sectors, alongside hospitality and domestic tourism.
Harford said the biggest emerging trend in this environment was not that some parts of the sector were doing better or worse, but that consumers were actively seeking to trade down products looking for better value.
“Consumer spend is restrained. That’s a fact. We’d like to encourage consumers to get out and support local businesses.”