Who stole the Turkey?

Some of you would have received our pre-Black Friday and Festive spend sentiment survey* last week or seen the poll on Linkedin.?The sentiment was clear.?Trouble is brewing, but for now, it's not stopping us. We plan to be spending more or at the very least the same as last year over both Black Friday and Festive.?While Black Friday may have been a little lacklustre for some, the weighting of sales back into the store environment will bode well for others.

In the global market, The National Retail Federation recently forecasted that holiday retail sales (in the US) would grow between 6% and 8% compared to 2021 against a?record breaking 13.5% growth in 2020 - this was compared to an averaged increase of 4.9% over the past 10 years.

“While consumers are feeling the pressure of inflation and higher prices... consumers remain resilient and continue to engage in commerce.?In the face of these challenges, many households will supplement spending with savings and credit to provide a cushion and result in a positive holiday season.”

National Retail Federation President and CEO, Matthew Shay

However across Europe and the UK things look a little different and the uncertainty and fear of war, along with rising costs of living and the energy and food crises have seen mixed reviews on forecasts. The latest on Reuters is that European retailers fear this Christmas could be the worst in at least a decade as shoppers cut spending while the costs of doing business show no sign of abating, squeezing profit margins.

Cameron Bagrie agrees with this global view of spending over the Festive Season and for New Zealand it looks like businesses will be sitting somewhere in the ombre between black and red as they close off their sales results for the 2022 calendar year.?It's the 2023 year that he is most concerned about.

Bagrie defines 6 "switches" we are likely to see in the coming year within the New Zealand economy:

Watch the switches

• Switch #1 - From durables, goods, and big-ticket items back to services, reversing what we saw in 2020 and 2021. Spending on holidays as opposed to a spa pool. E-commerce stalls.
• Switch 2# - Inflation versus the environment and sustainability. The latter are important issues but add to costs. The cost of living is the household's top concern according to the IPSOS Issues Monitor. Value propositions are going to be tested, but will consumers pay?
• Switch 3# - Can the government contain spending to help the Reserve Banks inflation crusade, or will election temptations dominate????
• Switch 4# - Jobs. Employees are finding it easy to switch jobs. When that stops, income growth will moderate with it.
• Switch 5# - The construction cycle. Construction is at the epicentre of the economy and spending. Inflation is not going away unless builders are less busy.
• Switch 6# - Rising recognition of demographics. More baby boomers are retiring. The grey force is rising faster than the workforce and the population 65 plus has $550 billion of net wealth.?

The bottom line for New Zealand

Christmas spending prospects look reasonable.?Next year will be when things really tighten up.?A divided society, cost of living crisis, and pending increase in unemployment projected by the Reserve Bank, is a nasty mix. Among the joys of tills ringing, one dominant theme needs to be how we bring New Zealand back together.

Market share will become a key focus for business, along with looking after people. Getting market share in a tougher market brings the fun back into businesses; reward comes from your endeavours beyond the market.?It certainly makes a well-earned drink at the end of the week more satisfying.

Read (and weep through) Cameron Bagrie's full economic outlook on our Waitapu Group website Insights page here.