In Retail (New Zealand): 2022 Holiday trading edition

2021/22 Holiday retail trading overview

In this edition of In Retail (New Zealand), we compare in-store activity over the holiday trading period with results from last year and pre-COVID. Unless otherwise stated, we are looking at in-store activity only (i.e. excluding online sales), covering the weeks from Black Friday to the second week of January.

Both 2020/21 and 2021/22 percentage changes are calculated against a 2019/20 baseline, being the last pre-COVID holiday trading period.

In-store card spending (% change versus 2019/20)

The data shows holiday spending in 2021/22 broadly in line with 2019/20 (down 1%), although footfall remained subdued (down 26%). In-store spending was similar to what was observed in the 2020/21 holiday trading period except for higher sales over Black Friday and Boxing Day, while inside footfall was less than the 2020/21 period. Stats NZ has reported that the total spending (including online sales) in December 2021 was $9.8b, an increase of 3.4% over the same period last year. This suggests that:

• In-store demand continues to lag pre-COVID levels being 1% below 2019/20, the last pre-COVID holding trading period (despite inflation over the last two years).

• Black Friday sales are becoming more popular with consumers, but Boxing Day sales continued to draw in the crowd, with nearly $100m spent on this day in 2021. Retailers can plan around this trend and gear up for Black Friday and Boxing Day sales to capture spending.

• Despite fewer customers browsing, spending per customer has gone up, possibly reflecting fear of COVID-19 reducing the number of shopping trips by consumers, but not their total retail spending. Consumers also continue to move spending online (not shown in these results).

• The holiday trading period helped some subcategories (notably Home & Recreational), but most are yet to recover.

• Moving into the traffic light system on 3 December and Auckland moving to the orange setting on 31 December did improve domestic spending. However, without international spending, overall in-store spending was still below the 2019/20 holiday trading period.

Retail spending by region

Spending by region mirrored 2020/21, with domestic summer tourism hot spots in the North Island, such as Manawatu-Wanganui, Northland and Hawke’s Bay all up over 8%.

Otago continued to be the worst-performing region with reductions of c.11%, due to the lack of international tourist spending on Accommodation and Food & Beverage Service in particular. Auckland spending was also down 5.2% as Aucklanders travelled outside the regions for the summer.

In-store card spending (% change versus 2019/20)

Retail spending by subcategory

Only Home & Recreational (+19%), Food & Liquor (+9%), and Fuel & Automotive (+6%) exceeded spending pre-COVID in this holiday trading period. All the other subcategories continued to be below the pre-COVID holiday trading period in 2019/20.

Home & Recreational retailers are still benefiting from consumers spending money on their homes with money saved elsewhere due to the closed borders and lockdowns. Black Friday appeared to be a major event this year for this category, with sales up +40% over 2019/20.

Fuel & Automotive spending likely increased due to higher fuel prices and easing of the Auckland border increasing demand for fuel (note the spike in the week of Christmas).

Transport & Travel Agencies, Accommodation and Arts & Recreation services continued to be hard hit with spending down -77%, -47%, and -44% respectively, over the 2019/20 period and are unlikely to recover until the borders are reopened for international visitors. Even with the soft reopening of the borders planned for April 2022, the expected number of international visitors will be limited by quarantine requirements.

Hospitality (Food & Beverage Services) showed a recovery trend as Auckland and the country moved through the traffic light system, but was still down 11% post-Christmas. Although domestic spending was strong, international tourism is required to increase spending to pre-COVID levels.

In-store card spending (% change versus 2019/20)

Footfall down on last year

The Kepler Analytics Retail Index shows both the inside footfall (-c.26%) and passers-by (-c.14%) were down over this holiday trading period compared to 2019/20, except in the week of Christmas (including Boxing Day), where the level of passers-by spiked. This suggests that passers-by did more window shopping and less impulse buying, which reflects the same seasonal trend we observed in the 2020/21 holiday footfall traffic. Shoppers seem willing to browse during the peak holiday period, meaning retailers should ensure enticing window displays to capture this spike in foot traffic. The rest of the year, consumers show a purposeful shopping habit, targeting specific stores during their less frequent shopping trips.

The reduction in footfall in 2021/22 did not result in lower in-store sales, suggesting higher average transaction value and continued targeted shopping by consumers.

Footfall inside (% change versus 2019/20)

In-store spending information sourced from MBIE-Paymark transaction data.

Thank you to Kepler for access to the New Zealand footfall data. If you would like to learn more about how Kepler can assist you, please visit www.kepleranalytics.com or contact info@kepleranalytics.com.

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