Weak Warehouse result, disappointing Christmas retail?

That is what is implied by this article in the Herald.

The Warehouse is a huge retailer in New Zealand, and with their Christmas retail sales disappointing this is bound to cause some concern.  However, this does not necessarily imply that the New Zealand retail sector struggled during Christmas.

Why?  Well, many people believe (rightly or wrongly) that the Warehouse generally sells a set of “inferior goods“.  Given this perception, if household experience an increase in their expected lifetime income they may well switch from buying things from the Warehouse and buy things from other places instead.

Even so, there are other indicators that suggest that December was weak.  Everyone could see the strong sales that were occurring before Christmas Day, and in many places there was the feeling that the crowds were a touch on the low side.  We will have a better idea on the 15th, when Stats NZ releases the Electronic Card data for December.

  • Sales in our part of the country were dismal. It seems like there were more people looking for sales after Christmas, with the amount of foot traffic I saw at our local Mall. We shall see when all the data comes in at the end of this month…

  • I think most countries had a rather weak Christmas spending season. It only makes sense with the weak economy. A lot of people were likely tightening up their spending, which included less presents. I think most businesses were expecting this trend this holiday season.

  • steve

    you are prob right laptop,

    the point of the article is to show that data for warehouse is not representative. for example, if spending at the warehouse had gone up, it could be a sign that is negative for the economy because people chose inferior goods over luxury goods. Instead, spending was down at the warehouse, so it is possible people are now secure enough in their jobs to spend less at the warehouse, and more on luxury items.

    As Matt said, we need to see the data on the 15th, to actually know what is going on.

    In terms of strong sales before xmas day, my expectation is that people held off spending untill xmas was closer, so they could be sure of income to pay those credit card bills. i.e. spending was down at the start of dec, but recovered in late dec as people were more secure in employment.