Massive retail drop as restrictions take hold

Tuesday, 31 March 2020

Spending dropped 72 per cent on the first day of the level four shutdown and has remained there since, according to the latest figures from Paymark.

In contrast, spending on the Monday and Tuesday ahead of the shutdown was about 50 per cent above the same time a year ago.

The stock-up was especially noticeable amongst liquor outlets, hardware and homeware shops and recreational goods stores.

New Zealand saw a massive drop in spending last week.

Averaged across the full lockdown week, non-fuel spending through Paymark totalled $907 million, 33 per cent below the previous week and, on an underlying basis, 27 per cent below the same time last year.

* Coronavirus hits spending on Chinese cards in NZ, but leap day gives a boost

* Disappointing December for retailers as shoppers seek out bargains**

Hardest hit during the first week of isolation were travel companies, entertainment firms and parking services. Their payments were negative in the first four days of level four restrictions, which meant those companies were having to pay money back to their customers.

Spending at non-food retailers, excluding pharmacies, was down 28.4 per cent on the 2019.

Tourism and accomodation were the big losers in the first week of the alert four shutdown, according to figures from Paymark.

Over the week ending March 29, accommodation saw a 78.4 per cent drop and takeaways lost 61.1 per cent.

Restaurants, cafes and bars saw a 87.2 per cent drop as the new isolation rules were put in place.

Otago was hardest hit by the shutdown, with a 39.8 per cent drop in the value of spending last week.

Other centres fared slightly better, with a 32.4 per cent drop in spending in Auckland and a 29.6 per cent drop in Wellington.

Wairarapa did the best out of last week, with just a 2.9 per cent drop in the value of spending.

Chris Wilkinson, managing director of First Retail Group, said retailers shouldn't expect an immediate snap back in spending once the restrictions lift.

New Zealanders will be navel-gazing at the moment, reflecting on what they really need says Chris Wilkinson, managing director of First Retail Group.

'As we come through this people's values, their needs, their expectations are going to change significantly,' Wilkinson said.

'We won't see an unleashing of consumers the days when we can get back out there. A lot of people right now will be navel-gazing and thinking about what they need.'

Over the next four weeks, people's habits would change, he said.

'Patterns of life will change and we are also going to lose a lot of people from the workforce and their spending power wil reduce significantly.'

Wilkinson said New Zealanders would enter quite a different retail environment once restrictions lift.