Shifting 10% of spend to small retailers could add NZD $11 billion
New analysis shows that shifting just 10% of New Zealand household retail spending from large to small retailers could inject an additional NZD $11 billion into the small business economy.
This follows Xero's review of consumption data, excluding areas unlikely to be served by smaller firms, such as utilities and transport, leaving an estimated NZD $110 billion in discretionary spending.
Consumer choices
Bridget Snelling, Country Manager - Aotearoa New Zealand at Xero, pointed to the power of deliberate consumer action as key spending events approach.
"November and December are the biggest months of the year for the retail industry. There is always a lot of noise coming from the big business retailers which can make the smaller retailers with their own unique offerings a lot harder to notice.
"We're calling on all New Zealanders to consider local small businesses when they're shopping over Black Friday and Christmas. Of course you need to consider your personal circumstances and household budgets, but even a small reallocation of purchases makes a big difference," said Snelling.
Retail environment
Over the past year, small retailers have faced difficult trading conditions. Xero Small Business Index (XSBI) data recorded negative retail sales results each quarter from March 2024, before showing a modest recovery to 2.9% year-on-year growth in the September 2025 quarter. Despite the lift in sales, employment in the sector remains subdued, with XSBI data revealing a -1.2% decrease in jobs for the September quarter.
Retail NZ's Retail Radar report found that while two-thirds of retailers remain optimistic about the future, 62% failed to meet sales targets over the last six months.
Black Friday impact
The upcoming Black Friday period presents both risks and opportunities, particularly for small businesses weighing up discounting strategies amid a volatile economic backdrop.
"In a turbulent economy, to discount or not to discount is a tough decision. But regardless of where small businesses land, there are ways small businesses can capitalise on Black Friday and the holiday season while staying true to their values," said Snelling.
Retail NZ's Chief Executive, Carolyn Young, observed emerging trends among local operators as they seek to navigate the holiday period.
"Retailers are walking a fine line between caution and creativity. While some are investing in fresh product lines and in-store experiences, many are holding off on hiring due to financial constraints. It's a pragmatic response to a challenging environment and caution is needed, as well as a strong strategy for the entire holiday season.
"We hear time and again that local operators excel in their service and those personalised touches that offer meaningful engagement to customers. The best local businesses form strong relationships and play a vital role in their communities. It's important for retailers to remember that being competitive isn't just about discounts," said Young.
Digital resources
Snelling noted that a range of digital tools are available to assist retailers in making evidence-based decisions. These include analytics features built into Xero for cash flow forecasting, as well as inventory management applications such as Cin7, which provide insights on stock control and sales event management.
Xero is encouraging retailers to scrutinise last year's sales figures and to use visual dashboards for better profit tracking. The platform suggests using cash flow forecasting to assess the short-term financial impact of stocking decisions during high-traffic periods such as Black Friday.
XSBI's findings reflect sentiment from both Xero and Retail NZ's leadership. "It's important for retailers to remember that being competitive isn't just about discounts," said Young.
