Our take on the latest Retail trade survey (Mon 23 Nov 2020)
Retail sales volumes are up 8.3%pa
Food and beverage services drive growth in the quarter
Christmas could be make or break
The key numbers...
- Consumers enjoyed the lifting of lockdown restrictions in the September quarter, with the total volume of retail sales growing 8.3%pa in September, up 28% from the June quarter (seasonally adjusted).
- The strong result in retail sales recovered the hole in spending from lockdown, with year-end sales volumes unchanged from the September 2019 year.
- New Zealanders celebrated their freedom by dining out and working on the house. After taking a very hard hit in June, food and beverage services contributed the most to quarterly growth (up 66% from June, seasonally adjusted) followed by hardware, building, and garden supplies (up 40% from June, seasonally adjusted).
- The volume of retail stock held by firms is sitting down 4.7% on a year ago across the board, providing evidence of the supply chain disruptions being felt.
Retail sales volumes
Annual growth rates
...and our reaction
- September was an incredibly strong quarter for retail activity, just enough to offset the hole in consumer spending caused by lockdown, with year-end retail sales volumes just back in the black.
- The growth in food and beverage services in the quarter wasn’t enough to offset the weakness in June – despite such a strong quarterly growth rate, sales were still down 5.9% from a year ago. Accommodation and pharmaceutical and other store-based retailing sales volumes are also still below September 2019 levels.
- Christmas this year is likely to be the make or break because it is traditionally the busiest time of year for most retailers. A strong performance in the festive season would support many businesses after an incredibly taxing year. However, a poor Christmas period could spell ruin for many stores hoping for a lifeline.
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