Carolyn Young: Retail NZ CEO on the growth in retail spending, increased costs

Retailers are on a “knife edge” deciding when to pass on increased costs to consumers. 

Retail NZ CEO Carolyn Young told Mike Hosking that retailers had been absorbing the immediate increase in import costs. 

But domestically, 93% of freight was moved on New Zealand roads, with 98% of those trucks using diesel. 

“Businesses can no longer absorb that. We've been talking to retailers this week and they're on the knife edge as to when they pass on those costs that they've been increasing, but it's going to be pretty soon.” 

Retail spending was up 2.9% at the start of March, mainly because of a “frenzy” of fuel buying, she said. 

“Everyone was queued at the fuel stations, at the petrol stations, and that meant that consumers clearly haven't been spending elsewhere as that's consuming up a big significant chunk of their disposable income.” 

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Episode Transcript

Speaker 1 (00:00):
So retail spending shows a half point rise per March. Good, well,
until you crunch down and find the shift towards petrol.
Of course, a lot more is being spent on gas,
which means a lot less as being spent elsewhere. Carol
and Young is the retail in New Zealand CEO.

Speaker 2 (00:12):
Morning Mike, how are you doing very well?

Speaker 1 (00:15):
Indeed, so the first weekend before the war started, or
the last weekend before the war started, he as spinning
was up two point nine I note through crunching through
these numbers, So that was real momentum. So the wars
are spending killer, isn't it? Basically?

Speaker 2 (00:29):
Yeah, absolutely, It just highlights the significance that we've had.
We know in March that there was a freendly on
spending on fuel. Everyone we acques at the field stations,
at the petrol stations, and that meant that consumers clearly
haven't been spending elsewhere as that was consuming up a
big significant chunk of their disposal income. And it gives

(00:50):
us an indicator of what we're going to see moving ahead.
And obviously you add inflation onto that sector, it's just
going to be another crunch time for retailers. To try
and survive through the.

Speaker 1 (01:00):
Yeah, so how much how that's the real question going forward,
isn't it. How worried are you about inflation because I
think I think petrol stabilized ish, but if people start
passing on their costs, that means everything else then goes up,
which means you're in trouble.

Speaker 2 (01:15):
Yeah. Well, of course, the big thing for retail is
diesel because diesels what ships spraight around. So even afe
majority of things, as we know, come into the country
from overseas, so that's freighted in. Those freight costs increased
immediately that that cost metap so retailers have been absorbing
those costs, and then domestically, ninety three percent of freight

(01:36):
in New Zealand moves on the road. You know ninety
eight percent of those road tracks will be using diesel,
so you know that's doubled in price. So there are
significant costs that come through. So it's going to filter
down as businesses can no longer absorb that. We've been
talking to retailers this week and they're on the ninth
edges to when they pass on those costs doesn't increase,

(01:59):
but it's going to be pretty so what are they.

Speaker 1 (02:01):
Tell you who's hit is HOSPO or anyone else? Or
we just don't know everyone? Everyone?

Speaker 2 (02:06):
You know everyone, because every you imagine anything you want
to get, whether it's at a pharmacy, at a soapermarket
and in apparel store, if you want gun boots for
the kids, or heaters or you want some DIY products.
Everything comes by freight. Everything's you know, the cost of
delivery has increased for everyone.

Speaker 1 (02:23):
Everyone's got. So how then do you explain an that
I disagree with you, but how do you explain the
variability regionally? Palmston North is up four point eight, Nelson's
up four point two, the coast is up three percent.
The war affects them as well.

Speaker 2 (02:35):
Yeah, exactly. But what we do know is that those
areas have been more buoyant anyway. So we know that
the more rural areas that are supported by farming and
dairy have been you know, they have survived better through
the decline than anybody else. Auckland and Wellington for example,
have struggled all the way through the South Island has

(02:56):
done better than the North Island. Urban's been worse than rural.
So those stacks a still sit there right and so
some of those areas will do well, and some of
those areas will be where farmers will know they've got
a payout coming. And we would have been expecting a
really big boom to come through sort of you know
that July sort of Dune July time. But I think
now there'll be some tempered spending from farmers that they contemplate,

(03:17):
you know, other increased prices that they're going to come through.

Speaker 1 (03:20):
Yeah, these are interesting times. Go well, Carolyn hold tough,
Carolyn Young, who's retail in New Zealand CEO, of course.
And I hope that that once and for all settles
the argument as proposed by a number of people who
texted me, but more importantly the Labor Party who somehow
want to be the government, when they were saying the
government was going to get much more GST because we
were spending so much more on petrol. Anyone who knows

(03:40):
anything about basic economics knows if you've got one hundred dollars,
you've got one hundred dollars, and if you spend one
hundred dollars, the GST on one hundred dollars is still
the same. It just doesn't matter where you spend

Speaker 2 (03:50):
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