Quarterly Update – March 2018

2018 got off to a relatively healthy start for consumer spending, up 2.4% on the same period a year prior, while transactions increased 3.5%. When excluding fuel and automotive spending, spending growth only fluctuated slightly to 2.1%, suggesting fuel prices are no longer playing the role in consumer spending growth that we saw in 2017.

TAKEAWAYS REMAIN ON TOP

It seems that old habits die hard, and takeaway spending’s positive trajectory over the last 12 months did not slow down in 2018, increasing 10.2% on a year prior this quarter. Hot on its heels were liquor and appliance stores, both up 8.0% on 2017. Takeaways also lead the way in transaction growth, up 6.6%. The lower level of growth in transactions compared to spending suggests a trend toward higher value purchases e.g. buying takeaways for the whole family, rather than solely an increase in frequency of purchase, that is driving the category’s boom.

FURNITURE STILL ON BACK FOOT

While we saw an increase in overall spend, there were some categories that had a slower start to the year. Furniture and flooring saw spending drop 7.2% on a year prior, a trend that we have seen developing since early 2017, as house prices boomed and house related ‘big ticket’ purchases like furniture stagnated. Footwear also saw a drop in spending, down 5.2%, followed by books and stationery, down 4.8% on the same quarter last year.

POST-SUMMER SPENDING PEAK

Looking at each of the months within the quarter, spending growth peaked in March, despite there being one less trading day due to Easter. Spending increased 4.8% during March (excluding fuel), while January and February both saw growth of 2.3%. Transaction growth exceeded spending in January and February, up 4.9% and 3.5% respectively, while transaction growth in March was 0.2 points behind spending, at 4.6%.

Mackenzie District experienced the strongest growth of the quarter, up 15.2% on the same quarter last year. This was also driven by spending growth in March, when spending was up a huge 36%, likely a result of Easter and the many holidays and road trips it encompasses (and the district’s attraction as a tourist destination, and road trip route).

STAYCATIONS ON THE CARDS FOR MANY

Interestingly, the growth in spending this quarter seems to have come from consumers increasing their local spending. Kiwis spending within their local area increased 4.3% this quarter compared to a year prior, despite having Easter and the hottest summer period ever luring people on holiday. Local storetype growth suggests that the increase in spending in people’s local area is not on necessities or home related purchases, but on ‘treats’, perhaps to negate the lack of holidaying. Local takeaway and liquor spending were up 12.7% and 10.9% respectively, both exceeding their total quarterly results. Coincidentally, non-local accommodation spending was almost unchanged on last year (-0.1%), suggesting either a drop in holidays, or a change in booking mechanism.

ONLINE REMAINS ON POSITIVE TRAJECTORY

While we only have the data for January and February online spending, the momentum of online spending growth in these months suggest it will be a busy quarter. January saw online spending increase 12% on the same month last year, with international merchants just beating out domestic at 13% growth.

February’s online growth remained in the double digits, up 11% on February last year. This was again driven by international merchants, who experienced 12% growth, compared to domestics 10%. As of February, annual online spending across the retail categories we cover is equivalent to 7.6% of total retail sales, and 10.9% when excluding food and liquor categories.