Tax Changes Buoy October Sales

Tax Changes Buoy October Sales

Kiwi retailers have benefited from increased sales in the month since the two major tax changes took effect, according to the latest Paymark statistics.

Figures released today show that spending through the Paymark network grew 3.3 per cent (year-on-year) in October – a growth rate nearly double that compared to the midyear months of May, June, July and August (1.8 per cent).

The net impact of the tax changes is evident not only in the total dollar value spent through the network, but the volume of transactions, which were up 4.9 per cent.

Paymark CEO, Simon Tong, says “We anticipated a rise in the value of transactions, relative to the 2.5 per cent GST increase, however the combined volume and value figures indicate not only an increase in spending, but that we’re are also purchasing more often.”

“One month’s data is not enough to determine if the increase has come as a result of people having more money in their wallets, or simply because prices have gone up – it would appear to be a bit of both at this stage,” he adds.
The growth has come despite October having five Sundays – typically the slowest trading day of the week – and a pre-GST sales surge late in September.

Whilst national totals point towards positivity, not all retailers or regions enjoyed the growth, with many finding themselves worse off than the same time last year.

Predictably, spending on big-ticket items declined, with furniture and appliance sectors down 6 per cent and 14 per cent respectively (year-on-year) reinforcing the belief that shoppers made the most of the big pre-GST rise sales.

The average value of electronic transactions in these two sectors fell 14 per cent and 19 per cent respectively, suggesting that October was a month characterised by heavy discounting and/or smaller purchases of lower-than-average price.

Sectors that experienced strong growth during October were takeaways (+ 10 per cent), supermarkets (+ 9 per cent), bars and clubs (+ 3 per cent) and footwear, which experienced a significant 8 per cent gain.

By region, South Canterbury, Palmerston North and Waikato fared the best, with growth rates of 8.1 per cent, 7.0 per cent and 5.7 per cent respectively, whereas spending fell in Marlborough (- 9.2 per cent) and the West Coast (-1.4 per cent).

Figures also show that debit spending (+ 6.5 per cent) continues to outgrow credit spending (- 0.3 per cent).

-ENDS-

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