New Zealanders’ retail spending hits $36.3 billion in 2024

Monday, 13 January 2025

Shoppers out at Lambton Quay, Wellington, on Boxing Day.

The latest electronic spending figures show the country collectively spent more last year than it did the previous year - but only just.

New Zealanders rang up $36.3 billion in retail spending in 2024, a 0.8% increase on the amount spent during the year of 2023.

Data by Worldline shows the number of transactions also increased, although the average transaction size declined marginally by 0.6% to $50.35, signalling the financial pressure or cautiousness around spending on non-essential goods during a high cost economy.

Worldline NZ chief sales officer Bruce Proffit said the low spending growth confirmed how tough the retail environment was for merchants last year.

“While consumers may have made more transactions through retailers in Worldline NZ’s payments network than the previous year, the annual underlying spending growth – that is, the actual increase in dollars spent – was the lowest we’ve seen in the last five years,” Proffit said.

2024 saw a cascade of retail, hospitality, and other businesses close their doors for good in 2024.

“Last year, the key driver was less money spent, with the likely key factor being the ongoing adjustment of budgets to the inflationary period that emerged in 2020.”

Figures from December show electronic spending reached $3.8b, down 0.7% on the previous December.

While the traditional pick up and flurry of spending brought about by Christmas and the summer holiday period did occur, Proffit said it was muted in some areas - and not enough to push spending above levels seen in major cities such as Auckland, Wellington and Christchurch a year ago.

Declines in annual spending volumes were recorded in Auckland/Northland - down 2%, Wellington, down 2% and Canterbury down 0.4%.

The largest decline was in the Marlborough region, down 2.2%. Other large drops were also seen in Palmerston North and the Bay of Plenty.

Annual spending growth occurred in some regions, with the highest increases in spending seen in West Coast - up 4.2% and Whanganui, up 3.4%.

Consumers spent less on the hospitality sector last year, according to Worldline figures.

Total spending through hospitality merchants in Worldline’s payments network reached $11.4b in the year, down 2.7% on 2023.

Briscoe Group warned investors its profit will fall short of previous expectations following “subdued trading” in its important holiday-season quarter.

Proffit said “budget pressure” was more evident in the hospitality sector last year, where the average transaction value declined 1.2% to $29.51.

ASB senior economist Mark Smith said while the overall electronic spending figures for 2024 were up, if inflation, wage growth and population growth was taken into consideration then in actual terms spending declined.

“If you look at inflation, generally, it’s around 2% for the year so in real inflation-adjusted terms, it has moved backwards. Also if you take into account population growth, and add those two things together, you get around 3%, so you're still looking at essentially a retrenchment in terms of per capita retail spending,” Smith said.

“Consumers are extremely guarded on the here and now, they’re reporting things are extremely difficult and their financial situation has gone backwards so they are reluctant to spend on major items.”

Smith expected retail spending to improve from the second-half of the year as labour and housing markets improved.

Retail NZ said the retail sector continued to be under pressure - and profitability was expected to continue to be a major challenge for retailers in the months ahead.

Carolyn Young, chief executive of Retail NZ, said the Christmas spending rush came later than anticipated this year, and December overall was not as lucrative as it had been in years past.

Retail NZ’s Carolyn Young says the next six months will remain tough.

“It’s disappointing to continue to have another month of decline in the year-on-year numbers, which are the critical numbers for retailers … it just reflects what's been a really tough year to finish on that note,” Young told The Post.

She agreed that any turnaround in spending would likely come in the latter part of the year.

“The next six or so months will be more of what we've seen, and so still a difficult economic environment. [Likely] further rate cuts by the Reserve Bank are going to take time and there will be a lag factor for that to filter through to people's mortgage rates and give people confidence [to spend again],” Young said.

“Consumer confidence needs to turn before consumers start spending in retail, and so the key factors for that will be that consumers are confident in their job security. We all know people within our whanau or friends that have been effected by restructures, and so everybody's concerned, is that going to be me next?

“If you've got job security, if you're seeing changes to interest rates that are making things more affordable, that your mortgage rates have gone down, you've got a bit more cash in your wallet at the end of the fortnight for your pay period, then you're going to have a bit more confidence, and that will mean people will spend more cash in retail. Those are some of the factors that we need to see, and it is going to take at least six more months.”

The fact retailers such as Briscoe Group, which have traditionally been the stronger the players in the market, had issued downgraded their profit forecasts as a result of December sentiment demonstrated the state of the current retail market, Young said.

Retail commentator Chris Wilkinson echoed the same sentiment.

Consumers had become accustomed to being shrewd with their spending amid financial constraints, and he expected that to continue to have long term impacts on the sector unless the government made switch changes to interest rates to encourage consumer confidence.

“Costs have gone up exponentially and transactions have been patchy and lumpy through the year.

“Caution really hit consumers last year, and this is not dissimilar to what's going on overseas, but hopefully we're going to start winding out of this in the months ahead,” said Wilkinson.

“One of our biggest challenges is that some of these behaviours now have become entrenched in consumers, and it's going to take some time to wind those behaviours out. People will need to be able to see kind of a clear path ahead, and that's going to require a number of things to happen, before spending picks up again.”