What Did Last Year’s Big Issues in Retail Survey Predict Correctly?

Among a number of initiatives led by the Centre for Advanced Retail Studies (CARS) at Massey Business School, the Big Issues in Retail Survey is one that does not only appear to bridge the academic-practitioner gap but also provide invaluable insights into the retailing activity in New Zealand. The Big Issues in Retail Survey is an annual online survey conducted by Massey University-Auckland in collaboration with Monash University (Melbourne). The two reputable universities partnered with ACRS and Retail NZ in 2015 to bring this project to life. The first survey was run late in 2015.

The results of the 2015-16 Survey were presented at the Shop. Kiwi International Forum held mid-February in Auckland (find the survey-headline report here). The results revealed a number of interesting, and maybe controversial, findings. For instance, the portion of revenues generated by physical stores is still remarkable (60%-89%) even though the online-shopping culture in New Zealand grew significantly in the past few years. Thus, it would be interesting to learn how well the first survey performed.

This article evaluates some of the Survey’s results and compares them to what has been found and recorded since then. While the Survey covered several topics and issues, the focus here will be on respondents’ views on market changes facing retailers late in 2015. More specifically, the article looks at how respondents predicted the followings: (note that the Survey closed mid-January 2016):

  • the demand in the next three months;
  • retail sales over the next three months;
  • the number of employees over the next three months;
  • the charged prices over the next three months; and
  • the number of new stores opening in 2016.

Figure 1: Respondents’ Views on Past and Future Market Changes

Respondents were asked to rate their market views on a three-point scale with 1 being Increase, 2 being Stay The Same, and 3 being Decrease. Figure 1 depicts the results of one-sample t-tests. Respondents’ views on market changes differ significantly from the population mean (Test Value = 2). Retail sales and the charged prices were more expected to increase in the next three months than the demand, number of employees and the number of stores were. This indicates that respondents were overall optimistic about future market changes.

Figure 2: % change in the seasonally adjusted retail sales

Survey respondents predicted that the demand and retail sales would increase in the next three months. It seems that their predictions were accurate. Figure 2 presents the percentage change in the seasonally adjusted retail sales over 21 quarters from 2011 to 2016. According to Statistics NZ, the total volume and value of retail sales in March Quarter rose 0.8% and 0.6% respectively whereas in June Quarter the total volume and value of retail sales rose 2.3% and 2.2% respectively. To make it clearer, the volume of retail sales is used as a measure of demand while the value of retail sales is used as a measure of actual retail sales. The Survey’s results suggested that retailers were optimistic about future changes in the market. This optimism was seen in that 11 of the 15 industries had higher sales volumes in March Quarter while 12 of the 15 industries in June Quarter experienced higher retail sales not only in volumes but also in values (Statistics NZ).

Evidence supports respondents’ expectations of an increasing number of people hired in the following three months. According to Statistics NZ, New Zealand experienced the largest quarterly growth in labour force since December 2004 in March-2016 Quarter. Although the unemployment rate increased slightly compared to the previous quarter (December-2015 Quarter), the employment growth exceeded the population growth in March-2016 Quarter. Whereas it did not decline, the employment rate increased only by 0.2 percentage points in March-2016 Quarter. Another accurate prediction!

Figure 3: % change in CPI over year quarters from 2006 to 2016

Another market change expected by respondents was the increases in charged prices occurring over a period of three months starting from mid-January 2016. Figure 3 presents percentage change in the Consumer Price Index (CPI) over year quarters from 2006 to 2016. Over 10 years, the CPI drops significantly in December Quarters. What is interesting is to see this pattern broken one time only by a decrease in CPI in March-2015 Quarter (for more on this, visit Stats NZ). Clearly, this did not influence respondents’ views on price increases. In March-2016, prices rose 0.2% and continued to rise in the following quarter (0.4%). Respondents got this right too!

Lastly, respondents expected the number of new retail stores opening in 2016 to increase. Unfortunately, a satisfying measure of this variable has not been found. However, 2016 had witnessed new market entrants as well as developments in commercial properties. Several businesses have entered the New Zealand market for the first time and opened their stores in 2016 (e.g. Zara, H&M, Top Shop, and David Jones). In addition, many retailers shared their expansion plans and expressed their desires to open many more stores in New Zealand in the next few years. For example, Bunnings announced in February 2016 its plans to open five stores in New Zealand to add them its 50 operating stores (NewsHub.). In the grocery sector, Foodstuffs allocated (approximately) a $200 million budget for new stores and refurbishment. In response, Progressive Enterprises allocated $500 million for store expansion in New Zealand, opening 3-4 stores every year in the next few years (Euromonitor International). Stuff.co.nz reported that Countdown is opening more stores than it is closing and has plans to open up to 12 supermarkets in the following three years. In the fast-food sector, Domino’s Pizza celebrated last July the opening of Store #100 and is planning to open other 100 stores across New Zealand over the next five years; the pizza chain asserts that “there is room to double its takeaway outlets in New Zealand” (NZ Harald). Perhaps this sums it all! It looks like Survey respondents had foreseen the chances for business expansion.

None of respondents’ views on future market changes was far from reality and their optimism seems to be justified. Officially published statistics and reports from multiple sources go in line, and agree, with the results, and predictions, of the Big Issues in Retail Survey 2015-16. The Survey performed particularly well in predicting changes to retail sales and prices. Thanks, of course, to the visionary leaders (respondents) who completed the survey.

I cannot wait to look at and compare the results of this year Survey which will, by the way, be presented at the Shop. Kiwi. International Forum held in Auckland this September (2017). If you have not completed the Survey, do not worry! You still have time to share your vision, opinions and the issues facing your business/es. Click here on Big Issue in Retail Survey 2016-17 and complete it. It closes Sunday 30th of April 2017.