One of the most recognised of summer holiday traditions in
New Zealand, and globally, is participation in the Boxing Day
sales held by retailers. This year, it seems New Zealand
retailers had more to smile about than most. It has been a
lean period for them. There have been closures and many of
those have been more than just a repositioning of an outlet.
Retail chains went into liquidation as they experienced bad
patches of too much inventory and not enough customers.
Cash flow became an issue of major concern. But that
stretched back beyond 2012, possibly as far as 2008, when the
''global financial crisis'' reached New Zealand's shores.
While this country did not have the collapse of banks that
marked that crisis in the United States, Europe and, to a
lesser extent, the United Kingdom, the collapse of many
finance companies cost a lot of Kiwis their retirement
When people who had bought cars with finance found they could
not afford the repayments, the cars were repossessed, the
finance companies stopped paying dividends and the cycle of
misery spread. Also, New Zealanders had borrowed heavily
against their homes during the last property boom. The
increased value allowed homeowners to substantially increase
their mortgages and buy luxury goods such as boats, new cars
and large leisure goods such as flat-screen televisions and
audio equipment. It seemed the good times would never end.
But, sadly, they did.
Not only did the Government have to step in and start
adjusting the country's finances, but homeowners also had to
take urgent steps to protect their own assets as interest
rates rose and home values started to fall. In some cases,
homeowners found themselves in negative equity situations
where their borrowings were now more than the value of their
residence. All of this combined to slow spending in our
The BNZ-BusinessNZ Performance in Services Index showed
Otago-Southland was suffering. The index covers retailers and
tourism operators as well as lawyers, accountants and
hospitality providers. The gloom set in down south and no
amount of talking the economy up could work any magic. As
people readjusted their spending, started to cope with having
less toys than before, and worked through the rising food
prices by making sensible choices, the retail climate started
The most recent of services indices showed Otago-Southland
retailers, hospitality providers and tourism operators
reporting increased activity with the regional index ahead of
the other three regions surveyed. One of the most impressive
of tales was the Christmas shopping rush. Admittedly,
shoppers are leaving their purchasing later than in previous
years, but the thrill of tills ringing has given retailers
hope major changes in spending behaviour are on the way.
Figures provided by Paymark showed this week New Zealanders
spent nearly 3% more in the week leading up to Christmas this
year than they did a year ago.
While that was mainly due to a resurgent Canterbury region
that was not reeling from yet another earthquake, Otago
retailers also reported improved sales. Encouragingly, it
appears New Zealanders have been saving to spend rather than
putting their purchases on credit cards in the hope they can
pay the balance off before the usury interest rates start.
Electronic card spending, which measures both eftpos and
credit card spending, continues to climb. During the year,
major retailers have been running constant ''sales'' with 30%
to 60% off their normal lines as a way of encouraging
shoppers through their doors. Other promotions included up to
five years of interest-free payments on major ticket items.
That may have deadened the senses of shoppers.
However, there now seems a sense of optimism in the South.
Economic growth looks likely. The Christchurch rebuild is set
to gain momentum early next year. Regional retailers are
expressing optimism about the future. Both those facts
indicate job growth is possible, something no-one could say
this time last year. As a regional population, we owe it to
ourselves to ensure we continue to support our local service