Retail industry 'far from dead' despite half of businesses struggling to hit sales targets

Retailers in New Zealand are struggling as a low Kiwi dollar and competition online impact their sales. 

It's not all doom and gloom though, with Retail NZ confident that the industry will be able to roll with the punches and evolve accordingly.

"Retail is changing, it's evolving - it's constantly evolving - but it's certainly far from dead," Greg Harford, Retail NZ's chief executive, told The AM Show on Monday.

Figures released by Retail NZ last month show more than 50 percent of retailers missed their sales target in the previous quarter, news Harford calls "concerning".

"Retail's been pretty flat over the last year or so," he says.

"It's pretty tough out there, it's a really competitive environment. It's only 39 percent of retail stores that survive beyond five years of being in operation."

Economist Cameron Bagrie says the main challenges for local businesses are competition online and the low Kiwi dollar.

He says a lot of the pressure will come at the end of the year for businesses.

"Christmas is when the retailers need to make their money, and what we're seeing over the past two to three months is that the New Zealand dollar has come down - so they've been ordering their goods, stocking up for Christmas and they're going to take a margin hit unless they can pass on price increases," Bagrie told The AM Show. "I think it's going to be pretty tough to pass on those New Zealand dollar price increases."

Harford says overheads, such as rent prices and staff salaries, make it hard for local businesses to offer the same prices as online competitors.

"I think people often don't realise the competitive pressure that's out there on the retail market. Costs are going up, customers have choices that they've never had before thanks to the levelling effect of the internet plus the competition that's coming into New Zealand. It's a very difficult market out there .There's certainly some stores that are doing very well, but there's a lot that really are struggling from month to month."

To add to this, consumers have less disposable money in their pockets thanks to rising petrol costs and rates.

Harford says businesses are starting to shift their focus to giving consumers more of an experience when they go shopping.

"In many cases it's going to be possible to find cheaper goods online, but what you won't necessarily get if you're making those purchases online is that customer experience, that in-store experience - the ability to touch and feel goods, the ability to go in there with friends and family and see what's going on," he says. "There's that whole social aspect to retail which is really, really important."

Bagrie says it's not just retailers themselves hoping for more business. The Government too is banking on consumers opening their wallets more.

"A big part of New Zealand's economic renaissance sort of recovery for 2020 is built on the consumer coming back and joining the party."