Media Release: Reflections and Projections

29 December 2003

Reflections and Projections:
The New Zealand Retailers Association looks back at the past year and at what lies ahead.

The market in the past year

The calendar year 2003 has been yet another satisfactory year for the retail industry in New Zealand.

Sales grew by 5.8% in the October year in actual dollar terms throughout the country.

Regional spending in both urban and rural local Government regions remained buoyant, but the rural areas recorded lower levels of growth than in the past year due to the rise in the value of the New Zealand dollar and the more cautious attitude adopted by farmers towards expenditure on new goods and services.
 

2003 Asian Retailers Convention and Exhibition

The major event hosted by the Association during the year was the 2003 Asian Retailers Convention and Exhibition held in Christchurch in September 2003.

The Convention attracted some 1200 offshore visitors from the leading retail chain stores in North, South and Southeast Asia, including 600 delegates from Japan and 150 delegates from the Peoples Republic of China.

The major trade exhibition held in conjunction with the Convention also provided a unique opportunity for New Zealand manufacturers and service providers to display their wares to potential Asian buyers.

The event was by far the biggest retail conference and exhibition ever held in New Zealand and was a huge success.
 

Government matters

Major submissions were made by the Association during the year on the Government's proposals to reform the current holidays legislation, and a Private members Bill to introduce four weeks annual holidays per annum.

Like other industry groups, the Association expressed major concerns about the financial implications of this legislation, which it was estimated would cost the industry an extra $122m per year.

Submissions were also made on shop trading hours legislation and the Association participated in the Review Committee set up by the Minister of Labour.
 

Compliance costs

The Association remains concerned about the increasing incidence of compliance costs to New Zealand business.

Whilst it welcomed some of the Government's proposals to simplify tax procedures for small business, it continues to see instances of cost increases to the industry, such as the recent 'security tax', as well as costs arising from the Government's industrial agenda.

The Association was disappointed at the outcome of the review of pharmaceutical legislation in that a licensed pharmacist must retain a majority shareholding in a particular business.

Retailing thrives in a free and competitive marketplace and no other sector of New Zealand retailing is protected by legislation which dictates who can own a particular business.
 

The year ahead

The Association believes, all things being equal, that 2004 will bring similar results to 2003 with sales expected to increase by about 5% in the year - unless major economic pressures compound a retrenchment in the New Zealand economy.

Any major rise in interest rates, and consequential dip in new housing construction or existing home sales, will inevitably have a negative flow on effect on retailing - particularly in the sale of major ticket items.

Any such interest rise will also inevitably affect the financial viability of the industry, particularly owner operators.

However, on the other side of the coin, the continued appreciation in the New Zealand dollar will likely see further reductions in the prices of consumer goods, particularly in the electronic, home entertainment and recreation field.

There are a number of legislative issues that will affect retailing during the forthcoming year.

The Government's review of the Employment Relations Act, particularly the ' transfer of entitlement' clause which preserves workers entitlements and conditions when a business changes hands, is seen to present considerable difficulties and costs to the retail industry, and major submissions will be made on this Bill in the early part of the year.

We also expect reviews of some of our consumer laws, which we hope will be approached from the premise of simplification and consolidation to reflect the trading realities of the modern day environment.

Shop theft, which is estimated to cost the industry between $1 and $2 million per day, continues to be a major problem for the industry, and the Association will progress its initiatives to address the problem through the development of a guide for small traders, as well as with the likely appointment of a specialised advisor to assist the industry to address in store issues.

The Association is also working with the Ministry for the Environment and the Packaging Council of New Zealand over the revision of the 1996 packaging accord, and with the grocery and general merchandise sectors, to look at specific initiatives that the industry can take to reduce the waste stream in New Zealand. 

Additionally, the Association will give considerable attention to the production of more detailed statistical intelligence for the industry during the year.

The wholesale and retail trade statistical series produced by Statistics New Zealand are currently being revised, but we recognise there is a need by the trade for better data on the industry's financial performance, forward sales expectations and the industry's overall contribution to growth in the economy.
 

Conclusion

Retailing makes a significant contribution to the New Zealand economy.  Sales now exceed $50 billion per annum and the industry employs in excess of 17% of the workforce.

The Association believes 2004 will bring similar results to 2003 and, provided consistency is maintained in the Government's overall economic direction, it believes 2004 will be another good year for the industry in New Zealand.

Further Information: 

John Albertson (04)  472-3733 (work)
(027)  445 9400 (mobile)
jalbertson@retail.org.nz

Barry Hellberg (04)  472-3733 (work)
(021)  673 480 (mobile)
bhellberg@retail.org.nz

John Albertson is the chief executive of the New Zealand Retailers Association and has held this position for seven years.  Before taking on the role of chief executive of the Association, Albertson was national group marketing manager of R Hannah & Co - New Zealand's largest specialist footwear chain.

Barry Hellberg is the Government Relations Consultant for the Association.  His main tasks include liaison with government and government agencies on a wide range of industry issues.