Challenges are mounting in the retail sector, with nearly a third of businesses approaching a tipping point.
Retail NZ's latest quarterly report showed almost half of businesses did not achieve their sales targets for the three months ended March, following a mixed summer peak season.
Manager of public affairs and advice for Retail NZ Aimie Hines said 44 percent of retailers did not meet their sales targets in the three months to March, and 46 percent said they did not expect to meet their targets again in the second quarter.
The average price increase of 5.4 percent for the three months to March was nearly 2 percent below the forecast rate of 7.1 percent.
Hines said more businesses have hit a price ceiling for their products and were reluctant to pass costs on for fear of losing sales.
"When increases are continuing from suppliers, wage increases, freight increases or the newly registered increases in higher insurance costs, those retailers are going to find that level with the sale and then also incorporating those costs into their business," Hines said.
"We see 28 percent of retailers being either unsure or not confident they will survive the next 12 months."
Hines said prices were expected to rise 4.7 percent over the next quarter due to external price creep.
Auckland's flooding and Cyclone Gabrielle had been significant issues impacting summer trading.
"Retailers across the country have had a mixed start to the year, with many in the North Island being impacted by weather events and the vast majority impacted by external pressures driving price increases," she said.