Falling local spending as household budgets face greater pressure is leading to "unprecedented challenges" for the retail sector.
Credit bureau Centrix data shows business liquidations are up more than a third year-on-year, with the retail sector leading the charge.
First Retail Group managing director Chris Wilkinson said more New Zealanders were taking their money offshore on holidays, while others were spending less as high inflation and interest rates ate into household budgets.
He said the pressures were being felt right across the retail sector.
"The big challenge is a lot of spending is now starting to escape back offshore. This year was one of the first periods since Covid that we've seen a lot of people travelling offshore."
Businesses benefited from "captive" spending during the pandemic as New Zealanders spent locally, Wilkinson said.
"Probably the most important aspect has been these extreme challenges consumers are seeing in their everyday lives - the cost of living."
Wilkinson said businesses had to be prepared for the challenging times by thinking hard about how to adapt their business.
"It's all about leaning in, making sure that you are spending time talking to your customers, being in front of them as often as you possibly can."
Wilkinson said retailers should also build networks within business communities, as working as communities have led to success.
He said having an online presence was also important during a tough climate.
"Many consumers start their shopping journey online. While cost is a key aspect for most people, convenience is [also] a key aspect."
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