The slight increase in electronic card spending in September was on the soft side of expectations, but research by MasterCard indicates there are plenty of benefits to come from New Zealand hosting the Rugby World Cup. Business editor Dene Mackenzie reviews sales in the retail sector.
ASB economist Christina Leung said she had expected the higher visitor numbers would have seen a flow through to higher retail sales.
However, there was potential for Statistics New Zealand's figures to have underestimated Rugby World Cup-related spending, given the data did not capture cash sales.
"Beyond the boost from the Rugby World Cup, we expect the recovery in retail spending will be gradual, reflecting the continued caution among households.
"While employment prospects and housing market activity have improved, household debt levels remain high and this will likely constrain the pace of recovery in spending over the coming year," she said.
However, the MasterCard New Zealand research papers show a different side to the Cup spending.
MasterCard said there was nothing like hosting a global sporting event to inject some welcome life into consumer sentiment.
Latest numbers from the Reserve Bank and Statistics New Zealand confirmed that the Cup was shaping up as precisely the kind of economic party the rest of the world wished it was hosting.
"Given the preponderance of quite entertaining statistics which usually coincide with such big events - we've seen measures like the number of sausages eaten or beer consumed - it's worth taking a look at some harder numbers to get a feel for the real value that RWC 2011 generates behind the headlines."
While it was too early to start drilling down into specific numbers from overseas visitors, it was clear there was some serious inbound spending under way, MasterCard said.
Compared with the same period in 2010, there had been a heartening jump in values that Mastercard was confident had its roots in rugby fever.
"It's pretty logical that new money from overseas is flowing into the New Zealand economy. The entrenched passion for rugby in the soul of New Zealand is also a visitor drawcard in terms of a welcoming experience."
The economic contribution of the 2011 World Cup differed from that of other similar sporting events because it was played over more than six weeks in locations spread throughout both islands.
The first and most obvious benefit was that the tournament provided locals from Whangarei to Invercargill the opportunity to see rugby played on their local grounds.
But just as importantly, the distribution of matches meant that visitors travelled and spent all over the country rather than confining their experience to a constrained precinct.
Research commissioned by MasterCard and undertaken by the Centre for the International Business of Sport at Coventry University on the effect of the Cup estimated that by the end of the decade, consumer expenditure in the New Zealand sports economy could be worth up to $1.2 billion.
The same study estimated that potential increases in tourism, capital inflow into the region around sport and business developments from the Cup would be $1.44 billion.
It also suggested that the number of workers employed in sport-related occupations could rise to between 52,000 and 58,000 by the end of the decade.
"As we've often pointed out, consumers prepare for spending peaks with troughs. As individuals, we do it before we travel or go on holidays. And, as a community, we do it in the lead-up to Christmas.
"So, while the research brings home the overwhelmingly positive impact of such a big event, it's logical we would have expected to see a dip in domestic spending in August led by this preparatory caution," MasterCard said.
That meant the industry might have been surprised to see a lift across all electronic transactions from August 2010 to August 2011 of 8%, bringing spending to $5.15 billion.
That pushed spending on all cards to $62.2 billion - up 6.2% on the same period last year.
Most interestingly, the Statistics New Zealand and Reserve Bank numbers showed that much of the increase came from domestic cardholders, not visitors.
Spending in New Zealand on overseas-issued credit cards in the past 12 months reached $3.5 billion - growth of more than 7%, MasterCard said.
When domestic spending in New Zealand on New Zealand-issued cards was analysed, there was a larger value of $27.3 billion but it was growing at a slower rate of 4.6%.
"Given that purchases of an estimated 1.35 million RWC 2011 tickets are anticipated to chalk up $268.5 million in sales, it's not hard to predict that September and October will be anything but normal."
Aside from ticket sales, the centre's report suggested $241 million was expected to be spent on accommodation and $224 million was expected to be spent on food and beverages during the six-week tournament.
"It almost goes without saying that will contribute to an extraordinary spike over the next couple of months."
