Temu, Amazon and AliExpress cash in as local shops do it tough

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People are increasingly buying from overseas giants like Temu rather than local retailers. (file image)
Photo: Nicole Serrano

Local shops might be doing it tough but sites such as Temu, Amazon, and AliExpress are cashing in on New Zealand shoppers, data shows.

Gross domestic product (GDP) data out this week showed New Zealand had – just – shaken off a technical recession.

Consumer spending rose 0.8 percent for the second consecutive quarter.

That might be surprising to retailers doing it tough. Retail NZ told RNZ this week that some shops were closing in what was described by one commentator as the “most challenging time” for them in modern memory.

But Infometrics chief forecaster Gareth Kiernan said offshore retailers such as Temu and AliExpress appeared to be the beneficiaries of that bump.

There had been a 20 percent increase in direct imports of low-value goods by households, the biggest part of that spending lift.

Kiernan said shoppers buying from overseas giants were an increasingly significant part of the activity.

“Between the combination of increased comfort with online shopping due to the lockdown, the return of international freight and supply chains to normal, and the squeeze on household budgets that is making people more price-sensitive and encouraging people to hunt down bargains, it is a very strong performer amid the retail gloom.

Temu is now rated by 17 percent of New Zealanders as the online retailer they use the most.
Photo: Screenshot temu.com

“Unfortunately, it’s of no benefit to New Zealand businesses whatsoever, and is in fact a negative for the broader retail sector as more of the consumer spend gets siphoned offshore.”

He said Temu had been marketing hard, and the breadth of products available to New Zealanders from Amazon had also increased.

NZ Post’s recent market sentiment report for ecommerce said Temu was now rated by 17 percent of New Zealanders as the online retailer they used the most.

First Retail Group managing director Chris Wilkinson said the amount of product being sent to New Zealand from China via Temu, Shein and other direct-from-manufacturer sources was significant.

“While some will be novelty purchases, others are becoming solutions such as mums turning to even cheaper solutions for infant clothing. Each transaction, though, is money lost to the economy and in the current market this is especially impactful.”

He said shops selling staples were doing better than more discretionary categories, such as apparel.

Data from payment network Worldline indicated that within New Zealand, spending by people buying was holding up best.

In May, there was only one day in the month when there was more spending in non-food retail than there was a year earlier. That was despite significant population growth.