New Zealand’s economy remains stable with GDP growth for the year at 3.2%. New Zealand's unemployment rate was down to 4.5% in Q4 2017, the fourth straight decline and the lowest unemployment rate since the last quarter of 2008.
This is reflected by improved consumer optimism towards job prospects in 2017 compared to 2016 as well as a slight lift in consumer confidence to an index of 106. New Zealand business confidence turned pessimistic in the December quarter for the first time in more than two years, following a general election and the formation of a Labour-led government and its policy plans unsettling businesses. Reinstated Labour Union powers and legislated minimum wage increases will drive cost increases for both manufacturers and retailers.
At present, inflation remains under control at 1.6% for the year to Q4 2017, down from 1.9% in the previous quarter. Food contributed to this inflation with grocery food prices up 2.5%, and restaurant meals and ready-to-eat food up 2.3%. Within grocery, value growth is driven by a combination of price increases and a move to more premium products.
Larger suppliers and private label brands continue to contribute a smaller percentage of the overall dollar growth while the majority of growth continues to come from smaller, most often local suppliers that account. These smaller suppliers tend to be more focussed on true innovation for local needs and/or premium and healthy products, both of which are currently important for Kiwi consumers.
For the second year in a row, New Zealand has claimed the top spot in the World Bank’s “Doing Business 2018 report” for ease of doing business, ahead of 190 other economies. Local government accredited this ranking to the effectiveness of New Zealand’s business regulators, including the speed and efficiency of the company registration process, meaning their regulatory environment is the most conducive to the operation of a local business.
In an increasingly global world, the battle of the brands comes down to understanding consumers’ evolving needs, behaviour, lifestyles and tastes. Any brand, be it local or global that is able to tap into these consumer preferences will be best-placed to win the hearts and minds of New Zealand consumers in the future.