Story by Amy Williams of RNZ
Squeezed household budgets are putting a big dent in how much money people can spend at the shops and retailers are struggling to stay afloat, some closing doors.
Retailers are looking at another tough year ahead, with the latest data showing consumer spending - on everything from food to big ticket items - continues to drop.
It comes as the number of people behind in debt repayments reached its highest level in seven years.
Bryan Williams, a liquidator for 30 years, said enquiries had ramped up considerably.
"There's unprecedented demand for insolvency services now and I think that's a reflection on the dip in the economy," he said.
"We have significant enquiries from companies that are suffering at the moment."
Williams has not seen such demand for liquidators since the residential construction industry nose-dived during to the global financial crisis.
"This is more widespread and it's impacted on most industries, it's not exclusive to retail. Almost all industries are feeling the pinch."
Williams' company BWA Insolvency is the liquidator for Silvermoon, which is closing 10 jewellery stores.
"This decision comes as the culmination of an arduous battle against the challenges that have beset not only our industry but the retail sector as a whole," Silvermoon said, in a message to customers on its website.
"Despite the diligent efforts and unwavering commitment of our entire team, the prevailing economic conditions and unforeseen market dynamics have rendered our continuation untenable."
In the liquidator's report published this month, Silvermoon owner Peter Lee said the business faced rising costs and prolonged production times.
"Facing post-Covid challenges, our business endured rising operational costs and prolonged production times, significantly impacting our profit margins and working capital."
Lee said the increased costs and extended timeframes led to a cash flow issue starting in May 2023, and despite restructuring and cost cutting, "the issues began to accumulate again in January and February".
"Consequently, we have made the difficult decision to proceed with liquidation as the most viable course of action to prevent further deterioration of our financial situation."
In its comments, the liquidator said although the company suffered from the recent pandemic, it "did not respond to the commercial issues it was confronting in a decisive and forthright manner".
The latest numbers from Stats NZ show retail spending using electronic cards fell 1.8 percent in February on the month before, just 2.5 percent up on the year before.
And credit reporting firm Centrix says almost half a million people were behind on their debt repayments in January - the highest in seven years.
Retail NZ chief executive Carolyn Young said retailers are finding it difficult to turn a profit.
"There's closures of some businesses happening. Retailers are telling us that they're still getting some foot traffic through the stores, but conversion to sale is really difficult. And when people do buy, they're spending significantly less," Young said.
"That's a big change and a big shift and it feels like it's going to be a really long 2024."
The Warehouse recently sold its struggling outdoor brand Torpedo7 for $1, while Freedom Furniture posted a $9 million annual loss.
Briscoe Group has reported its profit fell nearly 4 percent for the year to the end of January, although it had record sales.
Its managing director Rod Duke said it was a challenge to maintain profit margins amid the economic downturn.
"When things get tough people start to look for value. The value proposition that we have in both our brands is that we sell famous brand names and we sell them cheap," Duke said.
"I think everybody wants a really good product at a really good price."
Liquidator Bryam Williams is also managing the wind-down of Warkworth institution Chocolate Brown, a chocolatier which failed to bounce back after the pandemic.
Someone's loss is another's opportunity - he said chocolate is recession-proof and with the right strategy a new owner could turn the business around.
"It's been incredibly difficult to find a buyer unfortunately because that's an excellent business, it produces an excellent product," Williams said.
"It simply requires someone to acquire it and do the selling and marketing effort as a layer across the restructuring effort that we've undertaken to make a very viable business."
RNZ
