Top 7 emerging New Zealand business trends in 2025

Cost and productivity pressures

In a study conducted by the New Zealand Institute of Economic Research for Xero, it was found that New Zealanders would need to work 20% more to reach just the average GDP output of countries within the Organisation for Economic Co-operation and Development (OECD).

"For Kiwis working a 40-hour work week, this is equivalent to working an extra day per week to make up the labour productivity gap, and that’s just to reach the average productivity mark. For business owners, it would be the equivalent of hiring one more employee for every five current employees.”

Bridget Snelling
Country Manager, Xero New Zealand

With Ireland taking the lead in terms of GDP productivity per hour, for Aotearoa, to match this output at current productivity rates, New Zealanders would need to work an additional 10.7 hours per day. That’s an additional 53.4 hours per week.

While meeting these hours would be impossible, it begs the question ‘how can New Zealanders bridge this productivity gap’?

There have been a number of changes that have impacted the cost of doing business in New Zealand. Since the Sixth Labour Government came into power in 2017, labour costs have further intensified cost pressures for businesses in New Zealand. While the introduction of a new public holiday and an additional five days of sick leave per year hoped to improve employee satisfaction, it also introduced business continuity gaps.

With these days off combined with yearly minimum wage increases, having to offer higher pay rates due to a tighter labour market and the consumer price index (CPI) rising to 7.2%, New Zealand businesses are under pressure to maintain and improve productivity levels or risk further rising business costs.

Tighter recruitment market

Organisations around New Zealand are struggling to recruit good talent in one of the most challenging recruitment markets New Zealand has ever seen. With low unemployment and immigration rates, 4.6% and 2.5% respectively, there is a significant backlog of jobs not being filled. From difficulties sourcing quality candidates in alignment with budgets to implementing initiatives to retain hard-working employees, there is currently a spotlight on the New Zealand recruitment market to combat such difficulties.

Work-from-home and hybrid working arrangements are now standard expectations for job seekers and even when these needs are met, a higher rate of pay is still necessary to secure quality talent.

To address rising labour costs and recruitment challenges, many businesses are exploring offshoring options for their sales teams. This strategy can help reduce the cost of new customer acquisition while maintaining a competitive edge in a tight labor market. Offshoring sales operations can provide access to a wider talent pool and potentially significant cost savings.

Diversified product and service offerings grow revenue and market share

Many organisations are merging, acquiring and partnering with other businesses that can help further diversify their product offering. From investing in digital transformation tools that can upgrade their products to establishing inter-group partnerships that can bolster existing technology or products to improve consumer offering; diversifying product and service portfolios is helping businesses sustain and grow revenue and market share.

In addition to diversifying product offerings, organisations are focusing on strategies to acquire new customers and maximise value from existing ones. New customer acquisition, upselling and cross-selling have become critical components of revenue growth strategies. Companies that excel in these areas can significantly boost their market share and profitability.

Customer experience is now imperative to business success

In the past, ‘price’ was the ultimate business differentiator, determining whether a customer would choose one brand over another. Research has found this not to be the case anymore, with customer experience (CX) becoming the new dealbreaker. In fact, 67% of customers cite a bad customer experience as the main reason for leaving a brand behind. Service is more important than ever to customer retention.

The proof is in the pudding: customers who have a positive CX are 54% more likely to make another purchase. Another purchase leads to greater profits and returns. Greater profits and returns lead to business scalability, growth and cost savings.

Organisations need to look at ways to elevate their customer experiences. This includes:

• Investing in top-shelf customer experience management software and strategies
• Implementing automation and artificial intelligence into various customer channels such as voice, email, messaging, social media and web chat
• Utilising analytics to review and analyse customer interactions
• Equipping employees with the knowledge, training and resources to deliver excellent customer service levels.

Channel migration to digital and self-serve challenges

Many organisations have aspirations to improve overall CX, ensuring customers are able to interact with their business via the channel of their choice while also introducing self-serve opportunities. Self-service interactive voice response (IVR) is all about giving your customers the power to resolve their own queries and issues in the fastest time possible. The technology allows contact centres to increase efficiency by providing callers with services that don’t require a live agent, consequently lowering costs associated with content centre headcount.

The challenge of developing and implementing a profitable digital approach comes down to the following according to McKinsey:

“A lack of strategic and detailed implementation programs leads to missed growth opportunities as well as the threats to established revenue. Only by understanding the root causes of customer behaviour can companies develop a coherent program to migrate them to digital-care channels.”

But even then, that takes a lot of time and investment to achieve for one business, especially if you don’t have a dedicated team to help.

Outdated tech and ways of working holding back effective operations

Over 50% of organisations that have outdated technology have productivity issues as a result. These ‘legacy IT systems’ lead to many operational issues. These organisations tend to lack the capacity to keep up with the speed and capability requirements of targeting significant growth trajectories. All of which can set back digital transformation goals.

The same can be applied to outdated ways of working. When a business doesn’t review its processes to identify more effective ways of doing business, it misses the opportunity to foster efficient employees and in turn, keep up with competitors and control cost.

When organisations are ready to embrace change, the difficulty then comes in finding the time and resources to facilitate it. Most of the time, these large-scale changes fall across multiple departments and can often risk failing due to unclear communications and no centralised knowledge management system to refer to.

AI adoption and integration

Businesses across New Zealand are increasingly exploring and adopting artificial intelligence (AI) solutions to enhance operations and customer experiences. As organisations dip their toes into AI, there’s a growing need for guidance and support in implementing these technologies effectively.