Learn how small-to-medium businesses like yours are faring in New Zealand right now – and learn about key retail innovations – in this quarterly macroeconomic update.
If there was a single word to describe the past few years in New Zealand retail, it would be ‘challenging’. Since 2020, retailers have navigated lockdowns, a pandemic, record rainfall and the acceleration of generative artificial intelligence, all coupled with a cost-of-living crisis that has tested consumers and small businesses.
The latest data, however, reveals that although conditions are still tough, there are welcome glimmers of hope.
Discover what that means for businesses like yours in the first in a new series, ‘The Quarterly Small Business Briefing’, below…
Currently, Inflation is down to 2.2 per cent1, consumer confidence is positive at 97.5 per cent2 and retailers have seen a slight increase in retail spend 3 – the first increase since 2022.
However, Carolyn Young, the CEO of Retail NZ, emphasises that “It’s still a really tough time for retailers… Retail spend may be up but we’re coming off a really low base, where 2024 [spend] was lower than 2023, which was lower than 2022.”
“It was a very average Christmas,” agrees retail strategist Chris Wilkinson of First Retail Group. He says that businesses are yet to see any real uptick in spending. “Cost of living is still very much top of mind, and top of media [coverage].”
However, if indicators continue to trend in the right direction, both Wilkinson and Young agree that retailers should start seeing relief in the second half of the year.
Right now, Young adds, retailers in rural and provincial areas are enjoying relatively higher sales, thanks to the strength of the dairy and land-based produce sectors.
"It was a very average Christmas"
What next for retailers and small businesses?
The next few months on the retail calendar include the Easter holidays – which can deliver an uptick in sales related to home improvement – as well as Mother’s Day and End-Of-Financial-Year sales.
Numbers to know in retail
70% of global consumers will purchase from outlets or off-price retailers in 20255
Why it matters: Amid a cost-of-living crisis many shoppers are cutting back on spending and searching for value.
How retailers can respond: One of the biggest challenges retailers currently face is convincing cash-strapped shoppers that their products are worth buying. However, there are a range of ways to communicate value, says Wilkinson, who recommends ensuring that retailers always offer entry-level purchasing options. “You need what we would call 'stepping stones of value'. So, people may aspire to shop with you, but the products may be more expensive. So having some entry-level products can get people in the door."
1 in 4 Kiwis has shopped with Temu 4
Why it matters: Global platforms like Temu and Shein are gaining market share in New Zealand thanks to their low prices and speedy delivery.
How retailers can respond: “Australasian businesses will never beat these types of businesses, but they can learn from their marketing strategies,” says Wilkinson, who points to Temu’s focus on gamification. Retailers can also differentiate themselves by reminding consumers of the sustainability, local nature or high quality of their own products.
Retail innovation radar
Stay up to date with the retailers changing the game on tech and innovation
Next-gen loyalty
Many retailers are focusing on loyalty programmes. Adairs’6 half-year results showed that its million-strong Linen Lover members account for 85 per cent of sales. Some brands, like PetStock7, are opting for personalised rewards, such as free DIY dog washes, over traditional discounts.
AI innovations
Petbarn recently made headlines with its first-of-a-kind Gen AI solution that offers tailored vet-approved advice and product recommendations, while The ICONIC is using AI8 to automatically scan and tag product photos with in-depth metadata, which has driven productivity gains.
In-store payments
When Adore Beauty opened its first physical store in Melbourne this year, it launched a QR code payment system9 that enables customers to scan their shopping cart and make an immediate and secure payment on their device. The brand also offers an in-store skin analysis system.
And Decjuba has partnered with resale site Authentified to enable customers to resell pre-loved pieces. Not only does the platform make reselling simple, it increases purchase frequency. A pilot programme found that 89 per cent of shoppers10 went on to purchase another Decjuba product. The launch comes as a growing number of retailers launch in-house resale programmes.
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