NZD $12 billion at risk for retailers as shoppers shun bad service

New research indicates that New Zealand businesses could face up to NZD $12 billion in lost sales this peak shopping season due to poor customer experiences. Analysis from Qualtrics XM Institute suggests that almost half of New Zealand consumers will cut back or stop spending with a business after a single negative interaction, putting significant pressure on retailers as they enter the vital holiday period.

Sales performance

Recent findings show that 62% of New Zealand retailers have missed their sales targets over the last six months. Many are turning to peak season events to regain lost ground. However, the data suggests that customer patience is wearing thin, and businesses cannot rely solely on increased footfall to boost performance.

"With Kiwi businesses already missing targets, businesses are counting on events like Black Friday to turn things around - and they simply can't afford to let poor experiences cost them sales," said Ivana Papanicolaou, Head of Customer Experience Solution Strategy, Qualtrics.

Customer frustrations

The leading causes of dissatisfaction among New Zealand shoppers include communication difficulties, cited by 48% of consumers, as well as issues with service delivery (40%), employee interactions (36%), and pricing concerns (34%). The research highlights a rise in the importance of pricing issues, such as unclear pricing and inconsistent discounts, as drivers of negative experiences.

"Shoppers will put up with longer wait times or busy stores if they're getting value," said Papanicolaou. "But when the issue is pricing itself: unexpected fees, inconsistent discounting, or value that doesn't match expectations - tolerance disappears immediately."

Unreported issues

Nearly a third of New Zealand consumers do not report negative experiences to businesses, while a quarter do not give feedback even after positive encounters. This 'silent feedback loop' increases risks for businesses, who may lose customers without any opportunity to intervene or improve. The problem is made more acute by businesses' increased use of AI-powered customer service tools, which may not always resolve issues effectively.

According to Qualtrics' 2026 Consumer Experience Trends Report, nearly one in five consumers who used AI for customer support felt it delivered no benefit-about four times higher than failure rates for other digital tools.

"Rather than solving problems during the busy peak season, poorly deployed AI risks create more frustrated customers who simply take their business elsewhere," said Papanicolaou.

Sector risks

Global data suggests that online retailers, credit card providers, and department stores are among those most at risk during periods of high consumer activity, with up to 58% of consumers citing issues in these sectors. Retail businesses are especially vulnerable given the concentration of annual sales during the holiday period.

Retention strategies

Qualtrics highlights three approaches for businesses seeking to reduce risk and preserve customer loyalty: empowering frontline staff to resolve issues quickly, developing a clearer understanding of what customers want, and framing customer experience improvements as a means of mitigating financial risk at the executive level.

"Customer experience isn't a separate initiative, it's a fundamental business discipline that directly impacts revenue," said Papanicolaou.