Spring Shopping Splurge - the Winners and Losers

24 Nov 2020

Heading into summer, new sofas, living and outdoor furniture are all in high demand as people spruce up their homes or embark on a full renovation.

“We sold the majority of our outdoor furniture almost as soon as it landed, and are working hard with our manufacturers to satisfy this demand,” says Freedom NZ Managing Director Debbie Ridling.

“The upholstery and furniture categories are significantly up with customers choosing to refresh their living spaces, a place that they have spent more time this year.”

"People are renovating their homes because they’re feeling confident about the housing market, or they have some money to spare that otherwise would have gone on an overseas holiday.”

Ben Kelleher, Managing Director of Personal Banking, ANZ NZ Ltd.

Freedom is not alone.

ANZ’s October card data shows spending in the home furnishings category was up 28.6% from the same time a year ago.

Spending at hardware stores rose by 31% from October 2019, while building materials stores increased by 18.8% and household appliances were up 13.8%.

“Our figures suggest many people are renovating their homes because they’re feeling confident about the housing market, or they have some money to spare that otherwise would have gone on an overseas holiday,” says ANZ Managing Director of Personal Banking, Ben Kelleher.

It’s welcome news for retailers who faced uncertainty earlier this year when New Zealand went into lockdown.

However, the surge in spending does pose some challenges for retailers.

Ridling says “globally furniture and homewares sales are booming, and demand is high. This has created bottlenecks with manufacturing and capacity constraints with global shipping causing significant delays.”

Partly in response to the pandemic, Freedom has reset its brand, with a product overhaul and a brand refresh. Furniture and homewares will continue to be the mainstay of the business, but Freedom has extended its range and introduced New Zealand-made sofas and dining options.

“We are following the global trend of ‘Made to Order’ upholstery, offering customers a wider choice of upholstery styles and fabrics, creating a look specific to them and their home,” says Ridling.

Kelleher says ANZ transactions account for around 30% of all card spending and are therefore are a good barometer for the economy.

“Overall domestic consumer card spending rose 9% in October from the same month a year ago,” he says.

“That increase is, in part, due to more customers opting to use cards rather than cash. That’s particularly the case for lower-cost purchases at dairies and takeaway restaurants.”

But the rise in spending also reflects the strength of categories like home furnishings and appliances.

The food deliveries category was the biggest winner, rising 161% from the same time a year ago.

“We have seen a surge in people using apps like Uber Eats,” says Kelleher.

“Many people started using the apps when we were in the Level 3 lockdown. Although we are out of lockdown now many have clearly developed a taste for having their meals delivered.”

People are also going out to pick up their meals, with spending at fast-food restaurants surging 20.2% and spending at bakeries rising 20.6%.

There has also been a rise in people dining at restaurants, with card spending rising 5.9% from a year ago. Spending on beer, wine and liquor has risen 22.9% from the same time a year ago.

The data also shows the uneven economic impacts caused by Covid-19.

Spending on cruise lines has plunged 100% from a year ago, duty frees stores fell 84.6% in October, travel agencies were down 80% and airlines fell by 69.9%.

Spending on both hotels and rental cars fell by just over 26%.

Spending in the overseas category fell 33% from October 2019. The spending that is still occurring in that category is largely made up of goods ordered from overseas websites, or through the use of apps like Netflix, Spotify, and online gaming services (which is included in the overseas category).

Computer software stores were a big winners, with spending soaring by 70%. Electrical parts and equipment rose 44%. The growth in these two categories reflects the rise in popularity this year of the home office, as more people work from home for at least part of their working week.

With more people working at home, spending at car parking lots has fallen 20%.

The impact of changing technology can be seen in the rise of fully automated service stations. Spending at Automated Petrol Dispensers rose 10.3%, while spending at Petrol Stations fell by 11%.

NZ Insights

Spring Shopping Splurge - the Winners and Losers

"People are renovating their homes because they’re feeling confident about the housing market, or they have some money to spare that otherwise would have gone on an overseas holiday.”

Ben Kelleher, Managing Director of Personal Banking, ANZ NZ Ltd.

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