New Zealand retailers are heading into the busy Christmas shopping season with renewed optimism, despite rising fuel prices, a weak dollar and pressure on household budgets.

Retail NZ’s latest Retail Radar report found 73.7 percent of surveyed businesses were confident they would survive the next 12 months, five percentage points above the average recorded over the previous two years.

Retail NZ Chief Executive Carolyn Young said the findings were encouraging given the economic conditions.

“We’re seeing strong confidence levels among retailers despite the continued pressures from high fuel prices, inflation and unemployment, a weak Kiwi dollar, muted consumer spending, and rising business costs,” Young said.

The survey, conducted between 12 and 27 October, found 75.1 percent expected to meet or exceed their sales targets during the final three months of the year.

“This tells us most retailers feel they have their settings right as they head into the festive trading season.”

Only 6.7 percent expressed doubts about their ability to remain in business for another year, compared with an average of nine percent across the previous eight quarters.

Recent trading figures also suggest conditions have improved.

During the July to September quarter, 53 percent of businesses missed their sales targets, down from the 60.7 percent average recorded over the previous two years.

Meanwhile, 10.5 percent expect to exceed their targets in the coming quarter, almost double the historical average.

However, financial pressures remain significant, with inflation at 3.7 percent and unemployment reaching 5.6 percent in the June quarter.

Consumer sentiment has recovered from earlier lows, but the Westpac McDermott Miller Consumer Confidence Index remains below its historical average.

With the general election approaching, the report also reveals what businesses want from the next government.

More than half of respondents, 53.6 percent, identified stabilising fuel prices as a priority.

Other concerns included frequent changes to government regulations, expensive electricity, card payment fees and competition from overseas online shopping platforms.

“Businesses make long-term decisions and every significant policy change comes with compliance costs, uncertainty and disruption,” Young said.

The survey found 88.5 percent supported changes to electricity pricing that would make renewable energy cheaper and reduce power bills.

Another 87.6 percent wanted stronger product safety obligations for international retailers such as Temu and Shein.

However, opinion was divided over proposals to ban businesses from passing card surcharges on to customers, with 47.4 percent opposed.

One respondent questioned why retailers should absorb additional banking costs.

“I do think the banks need to take more responsibility. We all pay banks so many charges already; they were able to wipe charges due to COVID but then all started charging again. It’s not fair to expect businesses, which are being charged more fees, to have to absorb them all.”

Young said the sector was looking for greater certainty as businesses planned for the future.

“Retailers are telling us they want a fairer and more predictable operating environment.”