Some Wellington retailers say customers were already curbing their spending before the Reserve Bank turned to New Zealanders for help to cool the economy.
The Reserve Bank has asked New Zealanders to curb their purchasing, in an effort to create a mild recession and take some heat out of the economy.
Despite this, Black Friday sales are underway across the country.
Responding to questions from MPs in the finance and spending committee on Thursday, Reserve Bank governor Adrian Orr admitted that the central bank was planning a recession to fight inflation.
“The faster inflation expectations fall, the less work we have to do and the less likely we are to experience a prolonged period of low or negative growth,” he said.
Shoppers on the streets of Wellington told RNZ on Thursday that wasn’t a problem – they had less money to spend anyway.
“The eye sees what it wants, and yet the bag says otherwise,” said one.
Another said he was “just living within my own means”.
Another customer said, “I think it will affect what I do in that my money won’t go that far and I’ll probably look for bargains more.”
“I think some people are already spending less,” said another, “probably because they don’t have the money to do anything else.”
Businesses also noticed a slowdown.
Julie Gubb of Gubb’s shoe shop in central Wellington said there were fewer customers and less money to spend since the start of the pandemic.
Pedestrian traffic past the store had fallen by half from its pre-pandemic level, she said.
“That’s probably because people work remotely, but I’m sure they’ve probably gotten into the habit of needing less and buying less.”
The shop had been trading for over 70 years, opened by Laurie Gubb in 1946 and then passed to his son, Julie’s husband Paul.
Julie Gubb said the plan was to close the store at the end of the year as they pulled out of a tough retail market.
Cuba Street art and clothing store Chile owner Micky Mo said the first two years of the pandemic were tough, but this felt heavier.
“The atmosphere has changed,” said Mo. People were less excited and prepared for Christmas, with no spike in customers around this time as they would normally expect.
For this year’s Black Friday sale, she would discount more things, and by larger amounts, to try and fit people’s budgets.
Greg Harford, CEO of Retail NZ, was concerned that the Reserve Bank’s advice could lead to a serious economic carnage, especially for small to medium-sized businesses.
The bank’s advice would be a tough pill for businesses to swallow, especially those struggling to get through the pandemic, he said.
So said Viv Beck, CEO of Auckland’s Heart of the City Report tomorrow she doesn’t believe the Reserve Bank’s plea for New Zealanders to spend less will dampen enthusiasm for Black Friday bargains. She said spending has gradually increased since the pandemic.
“There’s definitely a concern about people starting to make choices about what they can and can’t afford,” she said.
“I think people will make their own choices depending on their circumstances. But I think today in terms of Black Friday, we’re going to see people looking for bargains.
“It’s the biggest, or one of the biggest, spending days of the year, and kind of kicks off Christmas spending. We’re still hoping for a good December for our businesses, because with a tough year ahead, it’s quite critical that we see some sales for them.”