Retailers report two‑speed recovery as confidence hits two‑year high
Tuesday, 17 February 2026
After a difficult few years, retailers are feeling more upbeat about trading conditions and sales prospects ahead, according to the latest Retail Radar report, canvassing sentiment in the industry.
The quarterly report for the last three months of 2025, found retailers were experiencing a “two-speed recovery” amid the economic downturn.
Interest rates are on the rise, at a time when unemployment has risen to 5.4% and consumers are still feeling the pinch of the high cost of living.
Despite that, confidence is sitting at a two-year high, with more than 76% of retailers surveyed saying they were “confident” or “very confident” that their business would survive the next 12 months. That was a big jump in confidence, according to Retail NZ chief executive Carolyn Young.
Read more:
The proportion of retailers now feeling “not confident” their business will get through the next 12 months had almost halved, she said.
“These are positive signs for the retail sector, however, retailers are still approaching 2026 with some caution,” Young said.
“The data shows a distinct gap between retailers who have stabilised and those who are still struggling.”
Retailers were downgrading their targets and taking on less stock, which indicated they were no longer expecting a quick bounce-back, Young said.
“The cost of rates, rent and insurance far exceed inflation and are slowly eroding the company’s profit. Because of high competition and lower demand, we are unable to move much on our prices making trading difficult,” one Retail NZ member said in the report.
Young said stock levels were lower, so retailers were buying less, which she believed was why more of them were meeting targets at the moment.
Conditions were not necessarily getting any easier, but rather retailers were adjusting their operations to try to remain viable. All the cuts to interest rates last year had made “zero difference” to spending intentions, she said.
“We have a small level of optimism we might be coming out the other side, but it does feel like it's going to be a slow burn. With inflation at the levels that it is, and with unemployment levels where they're at, consumers just don't have their confidence in their job, which makes it quite tough.”
About 80% of those who met their sales targets by the end of 2025 said they expected to continue to do so through the year, and 28% of those missing the mark expected that to turnaround in the first quarter of 2026.
Young said that was “a positive sign that retailers may finally be starting to realise those economic green shoots on the shop floor”.
The report states most retailers are not planning to make any changes to their recruitment, while almost 30% plan to either reduce hours of staff or freeze recruitment entirely.
New Zealand card spending data shows the annual spend on discretionary goods per person has risen 33% from $15,898 in 2016 to $21,166 in 2025.
It is a slight decline in real terms when compared against the 35.6% inflation recorded over the same period.
However, consumers are now swiping 22% more often - an average of 385 transactions per year per person, while the real value of each transaction has plummeted.
The average transaction value is now $55 compared to $51, 10 years ago.
In January, almost 71% of transactions were via credit card and 29% debit. The amount of money being spent on credit cards has been rising steeply since 2020. Back then, 56% of transactions were made using credit cards.
Jennifer Andrews, asset manager of retail at Oyster Property Group which manages shopping centre Dress Smart, said retail conditions had improved across the start of the year, and retailers were generally seeing demand across apparel and its hospitality categories.
Andrews told The Post consumers were still “value-driven” and were only inclined to spend money if a perceived significant discount was on offer.
She said retailers with clear, well‑signed discounts tended to perform the best among outlet offers.
“Retailers are expecting a continued slow improvement.”
Auckland CBD shopping centre Commercial Bay is also reporting strong sales and consumer interest. Retail centre manager Andrew Trounson said he remained confident about the outlook, with events driving spending and bringing more visitors to the precinct.
Sales at Commercial Bay had been trending upwards month-on-month since mid-2025. January sales were up 4.9%, he said. .
Trounson said February was continuing the trend, with SailGP lifting foot traffic by 14% compared with the same weekend last year — a pattern he noted often accompanied large‑scale events in the city.
The elephant in the room
New Zealand retailers are not widely using artificial intelligence (AI). While there are reasons to get behind the technology, the cost savings are not yet at levels convincing enough to get all operators on board.
Young said there were currently more retailers not using the technology, than those using it or considering it.
“AI offers opportunity, but as with anything, nothing's a quick fix and nothing can be implemented without the support of people around it. You have to train AI to be able to answer questions in a way in which it's going to get the right outcome, you have to continue to work at those things to ensure that it can make a seamless transaction available for a consumer, and we're at the early stages of that development in the sector,” Young said.
“It's an enhancement to retail, but it's not a replacement of current customer service, bricks and mortar, and in the way in which we do business.”