It appears shoppers may have heeded the Reserve Bank’s warning to curb spending, as Black Friday discounting failed to deliver record sales this year.
Figures from electronics payment network Worldline show spending on Black Friday was down 6.9% compared to 2021, and 9.5% last week in the lead-up to Friday.
About $350 million was spent in the week ending Saturday, and $67m on Black Friday itself.
When compared to pre-Covid-19 levels, however, actual spending was up 1.5%.
Retail NZ said some retailers would have been left “disappointed” by the sales result despite shops being generally very busy with shoppers out browsing the sales across the country.
* Boxing day sales extend record December spending spree
* Shoppers spend $248.2 million on Black Friday weekend, but retailers are still struggling
* Lockdown hampers retail spending in Auckland and Northland
The industry membership group said the lack of sales growth this year after consecutive record sales in previous years was “not entirely surprising” given the current pressures on the household budgets.
“Consumer spending has been depressed all year as we grapple with the cost of living crisis, reprioritise spend and trade down for cheaper goods,” said Greg Harford, chief executive of Retail NZ.
The modest amount spent during Black Friday confirmed that shoppers were looking for bargains as the economy tightened up, Harford said.
Reserve Bank governor Adrian Orr urged consumers to stop spending in a bid to avoid a recession.
Orr told Parliament’s Finance and Expenditure select committee that the Reserve Bank was engineering a recession, saying it was deliberately trying to slow the economy.
The Reserve Bank raised the official cash rate by 75 basis points to 4.25% last week and surprised economists by forecasting the rate would peak at 5.5% next year while also predicting a further rise in inflation and a year-long recession beginning in April.
Commenting further on the recession risk, Orr said the power lay in the hands of the public, who could reduce the need for an economic contraction if they collectively cut their spending and assumed inflation would fall as a result.
“The power is in the hands of the people. You know, if you just start behaving, ‘1% different’ around inflation expectations and wage growth that makes our job easier. We don’t have to pay that cost,” he said.
Retail commentator Chris Wilkinson said he believed wet weather on Saturday and downpours on Sunday had negatively affected retail sales.
“The unpredictability of Saturday’s weather and Sunday’s downpours were impactful for businesses in some centres with rain and road conditions affecting peoples appetite and ability to head to the shops,” Wilkinson said.
A decline in purchases of big ticket items, including appliances, on Black Friday and in the lead-up to it would have dented overall sales, he said.
Auckland and Northland spent $145m, a 12% decline on last year, followed by $46.8m in Canterbury, down 9%, $37.4m in Wellington, down 10%, and $24.8m in the Waikato, down 9%.
No regions recorded an increase in spending.
Overall, spending was mixed, with the gains in some retail categories not enough to lift overall declines.
Spending at furniture, homewares and hardware merchants was down 20% for the week – all categories that experienced big sales lifts during Black Friday 2021.
Sales of clothing, footwear and apparel declined by 5%.
Worldline said the spending figures signalled what could be ahead for the all-important Christmas period, and it anticipated fewer merchants would experience Christmas spending records this year.
Analysts warned in the lead-up to Black Friday that sales promotions and discounts would need to be significant to entice shoppers to part with their money in this high inflationary environment.
ASB chief economist Mark Smith expected overall sales would be muted this year due to the higher prices of goods.
Black Friday 2021 fell shortly after Auckland’s lockdown lifted, which was said to have influenced the spike in spending for the month of November.