Consumers set to give SMEs a lifeline with strong Christmas spending planned

•  More than a third (35%) of SMEs expect revenue to be down this Christmas
•  Nearly three quarters of SMEs see the holiday season as important to their business
•  64% of consumers expect to spend the same on Christmas gifts, 10% plan to spend more
  

The Christmas period is fast approaching, and while New Zealand’s SMEs are cautious about what the season will look like for them, Kiwi consumers are looking to embrace the Christmas spirit and spend their money locally. 

MYOB’s latest Holiday Trading Snapshot – based on research which polled 1,000 local consumers and over 500 SMEs nationwide – found that just over a third (35%) of New Zealand’s SMEs expect their revenue to be reduced over the Christmas and New Year period, compared to the 2019/2020 season. Encouragingly however, 44% percent of business owners and decision makers said they expect their revenue over this time to be about the same, while one-in-10 are expecting their returns to increase.

The snapshot also revealed that nearly two thirds (64%) of consumers expect to spend the same on gifts as they did last year and 10% are anticipating they’ll spend more. With most businesses expecting similar performances, and customers looking to spend the same – if not more than in 2019 – there are positive signs for a solid Christmas trading period for New Zealand SMEs.

MYOB New Zealand Country Manager, Ingrid Cronin-Knight, says despite COVID-19 delivering unprecedented challenges for businesses of all sizes throughout the year, news of consumers’ local spending intentions across the Christmas and New Year period will be welcomed by many SMEs.

“Our small-to-medium sized businesses can take some encouragement from the fact that three quarters of New Zealand consumers are intending to spend the same or more celebrating the festive season this year, and what’s particularly heartening is that we’re seeing a proportion of this spending is set to take place at local businesses,” says Ingrid.

How we’re shopping 

More than a quarter of consumers are looking to buy locally, with 27% of those surveyed saying they intend to purchase gifts from home-grown New Zealand businesses. Over half (55%) of those expecting to purchase from a local business are doing so because they believe it is important to support local business owners and operators. 

Having an online retail presence is still proving to be an important consideration for New Zealand’s SMEs, with more than half (55%) of consumers planning to do at least a third of their Christmas shopping online. However, online shopping overall this Christmas is down 17% on 2019 levels. 

The research also highlighted that shopping in-store still holds appeal for a majority of Kiwi consumers (70%). What’s more, of this group, just over one-in-10 (11%) said they plan to shop in-store because they particularly enjoy the Christmas shopping experience.

“Consumers are looking to both in-store and online retailers this year, with in-store shopping being the more preferred option for Kiwis this Christmas,” says Ingrid.

“However, online shopping is still a popular channel for New Zealanders looking to buy Christmas gifts, and as we saw during the COVID-19 lockdowns, if an online store is within the financial means of a business, then taking advantage of this as we enter the festive season could open some SMEs up to a lot more customers.” 

When it comes to what New Zealanders will be buying in-store or online, clothing and footwear retailers can expect strong shopper numbers this Christmas, with more Kiwis planning on gifting loved ones with fashion and footwear (45%) compared to food and drink (32%), which proved to be the more popular choice last year (47% in 2019).

The most important time of the year for local business

According to MYOB’s Holiday Trading Snapshot, nearly three quarters (73%) of SMEs surveyed said that the Christmas period is important to their business, with 20% saying it’s extremely important. In fact, almost a quarter (24%) of local SMEs estimate that summer holiday trading accounts for 20%-30% of their business’ annual revenue.

“Many businesses rely on the Christmas and New Year period for a large chunk of their income. Following what has been a pretty turbulent year of trading for many New Zealand businesses, hopefully the holiday period this year will be a light at the end of the tunnel - particular for those SMEs whose business or industry has been in desperate need of consumer spending,” explains Ingrid. 

Adjusting and adapting to meet customer demand

A significant 60% of SMEs surveyed said they have made changes to their business operations to prepare for the upcoming holiday season. Of this group, 24% are planning to extend business hours, however 13% plan to reduce business hours, and 15% have planned to close over Christmas and New Year. 

More than half (58%) of those looking to change their business hours or close over the holidays, said this year is the first time that they’ve made such changes to their operations.

“Some businesses will be leaving their doors open for longer to reach more customers, or to cater to a strong demand from customers. They might also see the increased appetite for spending by consumers and use this period as a chance to catch-up on lost revenue after being closed over lockdown,” says Ingrid.

“Meanwhile, others may find it’s more beneficial for the sustainability of their business to close early or close down over Christmas. Ultimately, these decisions depend on the circumstances of each individual business, and some SMEs will undoubtedly still be assessing the benefits and weaknesses of staying open longer, closing earlier or staying completely closed. 

“Whichever way they might be leaning, business owners could choose to discuss their plans with their business advisor or mentor before coming to a final decision.” 

Taking a local holiday

The summer break isn’t just about Christmas and shopping, however. It’s also a chance for New Zealanders to get away and spend time enjoying a summer break with friends and family. 

This year, Kiwis going on holiday over the Christmas and New Year period have budgeted an average of $704 for their travels – down only slightly from 2019’s average travel spend of $725. Of the 70% of those planning to travel, nearly half (45%) are intending to travel regionally throughout New Zealand and 23% expect to travel locally, within their own region.

Shelly Beach Top 10 Holiday Park owner, Aaron McFarlane, explains that the border closure has prompted bookings from domestic travellers which has helped his business bounce back after lockdown. 

“We’ve already had a massive wave of Kiwi guests that we don’t traditionally see at this time of the year – in fact, many of our guests have never stayed at a holiday park before,” says Aaron. “We have also seen record bookings for the peak holiday season and some of these dates were fully booked by October.” 

“I’ve no doubt that these guests will be supporting other local businesses such as cafés, restaurants and shops that have also taken a hit this year due to COVID-19, so it’s incredibly important that while there is potential for another outbreak, that we support each other and use these opportunities to shore up our ability to operate.

“It’s promising to see that a majority of people are planning on travelling around Aotearoa over the coming months – this will hopefully be a welcome boost for some tourist-centric regions that have been hit hard this year, as well as the local retailers that tend to benefit from the holiday rush,” adds Ingrid.  

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