Retail sales tumble to largest drop since 1995

Confirmation the country's retail sector is doing it hard came today, with a record quarterly fall in core sales.

Core retail sales - which excludes the volatile vehicle and fuel-related categories - tumbled 2.5% by volume in the first three months of the year, the largest quarterly drop since the series began in 1995.

Sales by value fell almost as far, by 2.0%.

The fall follows two quarters of strong growth and a drop was expected, although not a plummet of this size.

The consensus market forecast was for a drop of 1.0% in core retail sales by volume.

The decrease is not as bad for total retail sales, mainly because of a 6.4% ($130 million) rise in sale of motor vehicles and parts.

This was, though, the only category to show a significant increase.

The biggest drop was supermarket and grocery store sales, which fell 6.2%, of $277m, by volume, the largest quarterly fall recorded.

Also showing a record decrease is accommodation, with a 5.0% drop.

To put the fall in perspective, the value of total retail sales for the year to March is up 4.4% to $17.2 billion, and for core retail sales it is up 3.4%, to $13.1 billion.

The question is whether this quarterly plummet is a one-off drop after two high quarters boosted by the Rugby World Cup, or whether it is something more.

"The industries that led this drop are the same ones whose sales were boosted during the Rugby World Cup - supermarkets, accommodation and fuel," industry and labour statistics manager Blair Cardno says.

"Although sales volumes have fallen, they are still above pre-RWC levels."

Adding fuel to this scenario is the admittedly somewhat statistically rough-and-ready regional breakdown of sales.

The big drop was in Auckland, down 1.6% by value. The main Rugby World Cup games in the previous quarter were played in the city at the tail end of the tournament.

Data released last week, but covering the more recent month of April, is cause for some cautious optimism.

Electronic card transactions, which make up more than half of retail sales transactions, were up 0.8% for all categories and 0.6% for core retail.