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Eat, drink and be merry

There’s a ready solution to the retail recession: ’tis the season to be jolly

There’s a ready solution to the retail recession: ’tis the season to be jolly

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[Market Metrics]

Christmas is the traditional time for spending and giving. It’s a big deal for retailers: sales for the average merchant on the Paymark network—used by the majority of Kiwi retailers—increases over 50 percent between early November and the week before Christmas. Sales for individual stores can double and more. This is the time when many retailers learn whether there will be a profit this year or not.

Encouragingly, sales growth is running better than last year leading into the Christmas pickup. Core retail spending through the Paymark electronic card network was more than five percent above year-ago levels in the three months ending October—a growth rate still below pre-recession times, but better than the paltry four percent for the same period last year. Helping the household budget, no doubt, is lower spending at the fuel pump a the gentler pace of spending growth at the supermarket (‘because-we-have-to’ in the graph).

However, there is little in the Paymark spending figures to suggest any acceleration of core spending trend, although retailers will be hopeful given improved consumer confidence. And better times for the average store doesn’t mean growth for all sectors and stores: for example, department stores are lately sitting at year-ago levels, in contrast to the footwear sector which is now reporting double-digit sales growth.

A similarly mixed picture emerges when we group spending together: ... discouragingly, we appear to be having doubts about our traditional can-do mindset, judging by the fizzle of discretionary (‘because we can’) and building-related (‘we can build it’) spending growth in October. But what the heck, ‘let’s go out’ —if nothing else, our restaurant and liquor spending habits suggest we intend to put plenty of Merry into this Christmas.