Shoppers may be spending Cost of Living payment, Worldline says

Thursday, 8 September 2022

A year on from NZ’s Delta lockdown, retail is picking up again.

Shoppers are spending more, and it may be due to the Cost of Living payment, new retail data suggests.

Consumer spending through core retail merchants on Worldline NZ’s payments network, excluding hospitality, was $2.83 billion in August 2022, up 14% on August 2021 when all of New Zealand moved to a Level 4 lockdown.

Worldline’s head of data, George Putnam, said several retail business sectors had seen significant lifts in consumer spending in August 2022 compared to the same month last year, including a 66% lift in spending through hardware and furniture stores, and an 80% lift in spending at clothing and footwear shops.

“Any year-on-year comparisons for August spending must obviously be looked at through the lens of Covid-19 and the restrictions that came about following the Delta outbreak in that month last year,” he Putnam.

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“While the August bounce-back of 14% is positive, the overall picture is still one of slow growth over the long term as merchants and consumers continue to adjust to the massive changes that have occurred in the last two to three years.”

First Retail Group managing director Chris Wilkinson says the Cost of Living payment had likely spurred some feel-good spending.

When compared to pre-Covid 2019, the growth rate in 2022 dropped from 15.1% in July to 11.6% in August, a drop exaggerated by the fall of days in August this year.

Putnam also noted a small bump in consumer spending over the first few days of August 2022 at the same time as the first instalment of the Government’s Cost of Living Payment was made to eligible people.

“The data shows there was a $14m lift in spending in the first three days of August through Worldline’s payments network, relative to the same three days one week earlier.

“However, at just 4% of total spending, we cannot definitively say that this change is due to the Government’s Cost of Living Payment, which was much larger, or is simply a common day-to-day variation.”

Regionally, spending through retail merchants remained above 2019 levels in all regions. The 2019-2022 growth rate was highest in Taranaki (23.2%), Hawke’s Bay (21.8%) and Wairarapa (21.1%) and lowest in Gisborne (2.2%) and Wellington (6.6%).

Beyond August, the early days of September have also seen a small increase in consumer spending, most likely due to Father’s Day, with spending up in bookshops, sports shops, hardware stores and restaurants and cafes.

Managing director of First Retail Group Chris Wilkinson said the data reflected the dynamic nature of the “start-stop economy” that retailers had been experiencing.

“There are few reliable spending patterns emerging and with so many unexpected factors that influence consumer need, confidence and action it's likely to remain that way for some time.”

“Significant growth in the furniture category on the same period last year, some of which was in lockdown, is completely understandable, and would likely be greater had rising interest rates and cost of living expenses not reined in consumer confidence.

“Without doubt, the cities are still some time away from recovery, while the regions have benefited from sea-change and tree-change trends which is seeing more people drawn to coastal and rural living, working remotely and lifestyle values.”

Wilkinson said the Cost of Living payment would have been a welcome bonus for many people and had likely spurred some feel-good spending.

“Although with most consumers feeling the cost of everyday living, it would have likely already been spoken for in managing life's essentials.”