Empty shelves as retailers struggle to get stock

Tuesday, 7 July 2020

Retail spending bounced back after the lockdown but shops still face a challenging road ahead. (Video first published on May 27)

More than 40 per cent of retailers are struggling to get the stock they need, according to the latest Retail NZ survey.

Retail NZ chief executive Greg Harford said 41 per cent of his members were facing stock shortages, with reduced levels of production from countries hard hit by Covid-19 and the small number of international flights coming into New Zealand.

International producers were opting to ship goods, creating delays in the import of some items, Harford said.

“A variety of books, fitness equipment, bicycles, hardware, clothing and homeware items have been specifically reported to be in short supply, particularly when sourced from China and other Asian economies.”

At the same time, there has been a bounce in demand from customers looking to spend.

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According to data from eftpos company Paymark, shoppers were spending more each time they go to the store.

Spending in shops was up 7.1 per cent in June compared to the same month last year.

The average transaction in June was $51 compared with $47 in June last year.

However, the situation remained mixed and hospitality merchants had reported a 6.1 per cent drop in spending during in June.

The June quarter was also down 15.5 per cent on last year, according to Paymark.

Harford said June was relatively positive for retailers but the long-term impact of Covid-19 still loomed large for businesses and shoppers.

Retail NZ chief executive Greg Harford says bricks and mortar stores will always have a place, but businesses will have to increasingly incorporate an online option as well.

“What we are seeing is that customers are getting back out and about into the shops. Kiwis are obviously not going overseas at the moment, so they might be looking to spend a little more here, on their homes and on discretionary spending,” Harford said.

“The outlook seems to be a little better in that sense and retailers are certainly feeling a bit more positive than they were a month or six weeks ago.”

The figures from Paymark mirrored those from the Retail NZ Retail Radar, also released on Tuesday.

Sales were up 34 per cent over June last year but 16 per cent down over the four-month period of the Covid-19 crisis, Harford said.

There was a significant improvement in retailer confidence, with 73 per cent of retailers saying they expected their business would survive the next 12 months, he said.

Harford said the June figures also reflected the release of pent-up demand, which would fade.

The challenge for retailers was the overall outlook heading into the second half of the year, he said.

“We have a lot of Government support propping up the economy at the moment, with the wage subsidy extension in place. There will also be a lot of customers who have taken up mortgage holidays,” he said.

“But all of that is going to come to an end in the next couple of months, and then we are going to see the pressure on retailers again.”

Infometrics economist Brad Olsen said he also expected numbers would remain positive for the next month or so before the economy began to soften.

“We are still in a period of catch-up, but we will emerge out of this in late August or September and that is when there will be a reckoning around job numbers and the economy,” he said.

Olsen expected household spending to be more constrained in last three months of the year.