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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 savings.
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 shops.
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 to turn.
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 industries.