BNZ’s Director of Institutional Research, Gary Baker reflects on Kiwis online retail spending post Brexit.
Post Brexit increase in online spending
Last month’s Brexit vote may be a distant memory for many, but it clearly made an impact on many New Zealanders online spending decisions. Online spending by Kiwis on UK websites surged in the week immediately following the vote – up 47% compared to the same week in 2015.
However, when we evaluate online spending in UK pounds rather than NZ dollars during this period we see an even more impressive difference. The amount spent at the checkout on UK websites was up 78% compared to the same week a year earlier.
What we were buying
In terms of what Kiwis spent their money on, categories which saw growth included; clothing, cosmetics, pharmacy products, computers and technology accessories. Sports and camping equipment also proved popular, perhaps spurred on by the mid-winter blues and attractive northern hemisphere pricing. The final category which saw a boost was UK department and variety online stores.
The exchange rates influence
Movements in the exchange rate played a key factor in Kiwis spending. Prior to the Brexit vote, the New Zealand dollar to UK pound exchange rate was 0.49 UK pounds per New Zealand dollar, tracking around 12% stronger than last year. Immediately following the 23 June vote, the pound weakened, and by the end of June the exchange rate was at 0.54 UK pounds per New Zealand dollar. This meant the New Zealand dollar was 24% stronger against the pound than it was at the end of June in 2015.
Some could argue that this lowers the spending level in New Zealand dollar terms, because the same goods now cost less. However, the lower New Zealand dollar has clearly encouraged people to make more purchases, which in turn increases the spending level.
Global online spending
To confirm the surge in online purchases on UK website in late-June was just a UK phenomenon, we also looked at New Zealanders online spending from the rest of the world during this time. While an increase of 14% was found compared to the same week in 2015, this in no way comes close to the 47% spending increase experienced on UK sites.