Electronic card transactions (ECTs) are a lead indicator of spending behaviour. The latest ECT data are another sign that New Zealand consumers are wary of credit, but are not entirely averse to it. Credit card use continued the downward trend of the past two years, dipping to 45.8% of transactions in the year to August 2009. But given the value of seasonally adjusted retail sales has been static over the last year, this means people aren’t spending less, but are taking advantage of EFTPOS to use debit cards and cheaper over-draft or revolving credit accounts.

Seasonally adjusted ECTs in the retail industry were relatively static, rising by 0.2 percent in August. Core retail sales, which exclude motor vehicle-related industries, rose by only 0.1 percent in August, following a 1.1 percent increase in July.

Another key retail trade sector indicator is StatsNZ’s retail trade survey. The July survey, released this week, reinforces the weak overall picture for this sector. Seasonally adjusted retail sales in July 2009 fell by 0.5 percent in the core industries and by 0.4 percent in the four motor vehicle industries. The biggest changes were a fall in automotive fuel retailing (-2.9 percent, $15 million) and a rise in motor vehicle retailing (2.1 percent, $11 million). The strengthening New Zealand dollar will help car importers by making it cheaper to buy in second hand cars from overseas. But fuel retailers will also feel the impact of substantially lower petrol prices, which fell 17 percent in the year to June 2009.

Sales in recreational goods retailing industries and the accommodation industry rose by $7 million. Sales fell by $6 million for department stores and the ‘other’ retailing category, which includes industries such as garden supplies, flower retailing and antique/used goods retailing. Sales in most industries rose or fell by less than $3.5 million.

The regional picture has continued to shift over the past couple of months. Confidence has returned most strongly amongst consumers in the Auckland region. Nominal retail sales grew by 3.2 percent in between the June and March 2009 quarters. The latest data for the month of July 2009 show retailers in Auckland rang up $1,748 million in sales, which is $40 million (2.3 percent) more than the same month a year ago. This level of growth in retail sales values may be consistent with stable or growing sales volumes too, but we lack regional retail inflation data to be able to confirm this. Nationally, inflation in the retail trade sector was 2.4 percent over the year to June.

Retail sales values rose by 1.3 percent in the Waikato region between the June and March 2009 quarters. But the July 2007 level was still 0.8 percent lower than the same month a year ago. Sales in the Wellington region and the South Island continued to contract over the past quarter.
In a proactive step by the Police, a Crime Prevention Expo held in Tauranga informed retailers about how to protect their profits by reducing the opportunity for criminal activity within their workplace.

Police estimate that retail loss through theft is estimated to be between $650 million to $1 billion annually, or between one and one-and-a-half percent of total retail trade turnover. Some retailers report that their loss is as much as five percent of turnover. BERL hopes to detail some of the key strategies that the Police recommend to retailers about how to prevent retail crime in a future article.