New figures paint bleak picture for retailers as spending plunges

New figures paint a bleak picture for retailers with the Christmas boom a thing of the past.

Spending dropped 6 percent in January compared to the same time last year. And in Wellington it's twice that figure.

The capital's department store David Jones is the newest casualty. And it could be a sign of worse to come.

It's known as Wellington's Golden Mile but the glimmer is fading on Lambton Quay. Department store David Jones is the latest victim, announcing this week it will close next year. It's an end to a century-and-a-half of history going back to beloved Kirkcaldie and Stains.

"It's really sad to see that David Jones is closing down in Wellington. It's an iconic site, it's been a department store for 150 years, and it will leave a really big hole in the Golden Mile," says Retail NZ CEO Greg Harford.

It will leave a hole too in the wallets of staff members - 84 people out of a job.

"It will be hard to replace those jobs quickly and easily. Retail's under significant pressure," Harford says.

And for retail the pressure is telling. National spending fell nearly 6 percent in January compared to the same time last year.

But in the capital it's double the damage - spending is down nearly 12 percent.

The figures make grim reading for retailers - long after lockdown, shoppers haven't come back. In central Wellington, there are nearly a quarter fewer people on the streets than this time last year. There's bad news too for other city retailers.

"Wellington seems to be first cab off the rank," Infometrics senior economist Brad Olsen says.

Working from home has changed how we spend.

"We're seeing people that are spending more in the suburbs, more closer to where they're living, because that's now also where their home office is," Olsen says.

And it's not just where but what we're buying. Spending on home and recreation is surging. But department stores shoes and clothing saw sales fall by the same amount.

"The reality is that it's hard for retailers. Our margins are tight," Harford says.

Margins have been tight at David Jones for years now. Across Australia and New Zealand they've announced plans to close 10 stores. The Auckland store will stay open when Wellington shutters.

Another casualty of the Golden Mile, where the streets are no longer paved with gold.