In Retail (New Zealand): COVID-19 special edition #4

09 June 2020

Retailers received some much-needed relief following New Zealand’s downgrade of its COVID-19 response status from Alert Level 3 to Level 2 from 14 May 2020, allowing stores to re-open, with encouraging footfall and sales data. However, there are clear winners and losers when comparing retail subsectors and locations and retailers as a whole still face extreme uncertainty as the economic and social impacts of COVID-19 are yet to become fully evident.

In this COVID-19 special edition of In Retail (New Zealand), we look to the numbers to examine the extent to which consumers are returning to brick and mortar stores as they re-open.

Overall, the data suggests the following:

  • Consumers are being more targeted with their trips to stores. Passer-by footfall was down more than instore footfall, with the spending data showing fewer transactions, but at higher values.

  • Inside footfall and total retail spend bounced back up to slightly higher than prior year levels for the first week of Level 2 trading, perhaps as consumers caught up on delayed purchases.

  • In the second week of Level 2 however, inside footfall was back down 16% compared to prior year, while total retail spend dropped back slightly in line with prior year levels.

  • While total retail spend has bounced back to prior year levels, comparative spending levels by retail sector vary markedly and CBD locations continue to suffer.

Finally, while this insight gives an indication on what is happening in the retail market at present, we would caution looking at this short-term data as an indication of a return to normal, or even a new normal, given the economic consequences of COVID-19 are yet to fully impact consumers. In addition, with the results varying markedly by retail sector and region, it is important to consider the detail, not just the headline numbers.


Kepler Analytics’ retail index has shown (in the chart below) that the move from Level 3 to Level 2 had an immediate impact, increasing passer-by and inside footfall from the 100% year-on-year reduction experienced during Levels 3 and 4, to 16.8% down and 0.1% up respectively in the week ended 24 May 2020. This initial spike dipped back again to 21.2% down and 15.6% down respectively in the week ended 31 May 2020. Despite being down on last year, the data suggests that the majority of discretionary store-based shoppers are willing to shop outside the safety of their homes.

It is not surprising that the inside footfall year-on-year dip is less severe than that for passers-by footfall, as shoppers are likely to be more targeted in their outings. This makes it important to have eye-catching window displays and a strong online presence to allow shoppers to thoroughly research their purchases before heading out to store.

Footfall (year-on-year % change)

Source: Kepler Analytics – Kepler Retail Index

Overall retail spending (in-store only)

The immediate bounce back in footfall was mirrored by consumer spending data, with MarketView’s Paymark (in-store) transaction data showing a return to 2019 spending levels in the first week of Level 2. Although this is positive news, retailers need to be cautious of the sustainability of this increase moving forward as:

  • unlike many businesses and their owners, the vast majority of New Zealand citizens have not yet felt the negative economic impact of the lockdown;

  • many consumers will have been making catch-up purchases, acquiring items desired but unavailable during Levels 3 and 4; and

  • the results vary markedly between sectors (discussed below) and regions (Auckland and Wellington city retail spend remains down 11.5% and 15.5% respectively on prior year), making it important for retailers to consider the detail, not just the headline numbers.

Catch-up purchasing is a sensible explanation for the total spend for the two weeks ending 27 May 2020 increasing by 2.5% compared to the prior year equivalent period (3.6% in week one and 1.3% in week two of Level 2). This was despite the total number of transactions being down by 14.5%, with the average transaction value up 19.9%, suggesting that consumers were targeting specific stores with their spending. This observation agrees with Kepler Analytics footfall data discussed above. It should be noted spending was weighted to the first week of Level 2, when consumers were first able to go out and shop.

Paymark transaction spend – seven day rolling average indexed at 8 March

Source: MarketView – Paymark (in-store) transaction data

Retail subcategory spending (in-store only)

As with the period immediately prior to lockdown, the first two weeks of Level 2 favoured some categories over others.


The biggest winners entering Level 2 were hardware, building and garden supplies retailers, appliance, computer and other recreational supplies retailers and furniture, floor coverings, houseware and textiles retailers. These three categories experienced 85.2%, 54.6% and 52.5% year-on-year gains respectively in the first week, reducing to 44.5%, 54.0% and 37.8% in the second week.

These categories predominantly represent home (and home-office) improvements and can easily be explained by catch up or deferred spending, as discussed above, but could also be a trend towards consumers utilising their disposable income to improve their homes. As discussed in our IN RETAIL (New Zealand) COVID-19 Special Edition #3, these sectors were not necessarily the first to be hit, but were some of the hardest and longest hit retail sectors during previous economic shocks as construction wound down.

Clothing, footwear and department stores also made gains entering Level 2 (18.2% up then 14.4% up year-on-year), likely due to catch up spending as consumers update winter wardrobes and as retailers start to clear winter season stock at discounted prices to make way for new seasons.

Supermarkets continue to remain up as restrictions on hospitality continued. While supermarket spending remains up compared to last year, spending has been trending down as restrictions are eased. We expect supermarket spending to return to normal as social distancing restrictions on the hospitality sector are eased.


Hospitality and accommodation continue to struggle (33.8% down easing to 22.5% down year-on-year) as many still work from home, social distancing restrictions on bars, clubs and restaurants remain in place and the lack of tourism due to the border closures impacts accommodation and hospitality providers. Tourist hotspots and major city CBD locations are likely to be bearing the majority of this reduction in spending.

Spending on fuel and automotive continues to remain down (21.7% down and 17.4% down year-on-year). This can be attributed to reduced prices at the pump and reduced demand as many continue to work from home and limit outings.

In-store spending (year-on-year % change)

Source: MarketView – Paymark (in-store) transaction data (3 February to 27 May 2020)

As noted previously, caution should be taken not to conflate these short-term results with the longer-term implications of an economic downturn.

Excluding travel spending, there was also a significant increase in online spending during April 2020 (compared to April 2019) that largely favoured the same retail subcategories as shown in the chart above.

A note on the supporters of this release

The underlying data used in this release has been provided by Kepler Analytics and MarketView for the benefit of New Zealand retailers and those associated with the industry.

For information regarding how Kepler Analytics can help you better capture the data surrounding your business and assist you in better understanding it, contact to, quoting “McGrathNicol” as a reference.

For detailed transaction data, relating to both online and in-store transactions, in your specific retail subcategory contact, quoting “McGrathNicol” as a reference.