Why the recovery is starting to feel real
18 December 2025|Written by: Dream Chronicler
Six weeks ago we wrote that rate relief was real but had not yet reached the showroom floor. Six weeks is not usually long enough for the picture to change meaningfully. This time it has. The recovery is no longer a forecast. It is being felt, and being felt unevenly. Here is what late 2025 looks like from our position in the industry, what we have been telling our trade partners over the last few weeks, and what we are watching going into 2026.
What October and November actually looked like
In the 1 December note we sent to our retail partners ahead of the Christmas rush, we said it plainly. October and November had both been very strong months for us, helped along by the recent interest rate cuts and a faster than expected lift in consumer confidence. That was written seventeen days ago. Today, with the December consumer confidence reading now published, that observation reads less like a hopeful note and more like the first clear data point in a sequence.
The recovery is not uniform and it is not finished. But for the first time in two years, there is enough going on to call it by name.
Two things drove our strong October and November. The first was the rate cuts finally starting to reach households. The 50 basis point cut in early October and then the 25 point cut in late November together took the Official Cash Rate from 3.00% to 2.25%. For households whose fixed mortgage terms happened to roll over in that window, the relief was immediate and meaningful. Payments dropped. Spare cash flow showed up. And some of it showed up in bedding purchases.
The second was that consumer confidence lifted faster than the rate cycle alone would explain. The ANZ Roy Morgan October reading was still at 92.4 headline and minus 14 on the retail indicator. By November the headline had lifted to 98.4 and the indicator to minus 9. That was the first real move off the floor in a long time. What we saw on our showroom floors corresponded closely. Retailers were reporting busier weekends. Customers who had been sitting on decisions were starting to close them. It did not mean every store in the country was suddenly busy. It meant enough stores were busy enough that the volume showed up in our numbers.
Today’s December reading confirms the shift
The December ANZ Roy Morgan reading came out this morning. The headline sits at 101.5, up 3.1 points on November, and the highest reading since September 2021. The “good time to buy a major household item” indicator, which is the single cleanest read on whether households are ready to spend on bedding, appliances, and similar big ticket items, climbed 8 points to minus 1. That indicator has not been positive for more than four years. It is now knocking on the door.
Read alongside today’s release, a few things stand out.
The future conditions index, which measures how households expect the next year or two to go, rose to 108.9. That is the highest reading since July 2021. Households are not just feeling better about this week. They are, in aggregate, starting to believe the year ahead looks better than the year behind.
The current conditions index sits at 90.4. That is the highest in a year but still below 100, which means current lived experience is still subdued for most households. The recovery is showing up in expectations first and in experience second. That order matters. It tells you the setup is constructive but that the actual on the ground spending will continue to lag the sentiment shift by a few months.
Inflation expectations eased from 5.2% to 4.6%. That is consistent with the recent softness in food price inflation, and it takes pressure off households’ sense that every price they encounter is going up. When inflation expectations fall, the willingness to spend on non essentials tends to rise. They are linked. The combination of falling inflation expectations and rising confidence is the most supportive mix we have seen for the retail sector in three years.
One detail from the release is particularly worth naming. Roy Morgan flagged that the current lift in the “good time to buy” indicator has been driven more by mortgage holders than by outright home owners. That is unusual. Mortgage holders typically underperform the rest of the population on this question when rates are high, because the repayment cost is crowding their discretionary budget. When rate cuts cycle through, that cohort starts spending first. What we are seeing in December is exactly that signal. The households who felt the most pressure through 2024 are the ones starting to release it now.
The honest flip side
None of this is a clean victory lap. Two strong months in a row is two strong months, not a trend. The December reading is one data point. Every retailer and supplier with any experience in this industry knows that confidence readings can unwind in a single month if the wrong headline lands at the wrong time. There are real risks still sitting between us and a sustained recovery.
The more immediate issue, for us and for anyone in the supply chain this quarter, is that the recovery arrived faster than the inventory planning had been set up for. In that same 1 December note, we were honest with our trade partners about this. A handful of key SKUs were running temporarily lean, with gaps of 10 to 20 days on some lines. Our containers had been caught up in the worst round of global shipping disruption in two years. Congestion at overseas ports, space pressure on vessels, delays around New Zealand’s own ports. More than two weeks of delay on some shipments, happening in the worst month of the year to have it happen.
We planned ordering well in advance to be ready for the Christmas period. Even with good planning, there are things you simply cannot control while containers are on the water. We also have to balance warehouse space and cash flow, so we cannot just over order everything even when demand surprises on the upside. That is the honest answer. The strong months of October and November were genuinely ahead of where we had positioned inventory. That is a better problem to have than the alternative, but it is still a problem, and it has meant tighter stock through December than anyone would prefer.
What we asked of our trade partners in that same note was simple. Where customers are happy to wait a short time for their preferred product, holding the sale rather than switching to an alternative is a real help. That request still stands. The containers are arriving. The team is turning them around as fast as possible. Backorders are moving, not in the order we would like but in the order we can.
What this says about 2026
The question coming out of 2025 is no longer whether the recovery will come. The question is how retailers and suppliers serve it well as it accelerates.
That is a different problem from the one the industry has been solving for the last two years. Through 2024 and most of 2025, the binding constraint was demand. Households were not walking through the door and were not closing deals when they did. Retailers who managed that period well did so by tightening cost, protecting margin, and waiting. The industry got good at patience.
2026 is going to reward a different set of skills. If the December reading holds, or even partially holds, the binding constraint through the first half of next year will flip. It will no longer be demand. It will be the ability to execute on demand when it arrives in waves. That means inventory planning that assumes lumpy acceleration rather than smooth recovery. It means ranges that are ready now rather than being finalised in March. It means merchandising that reflects the customer who is starting to spend, rather than the customer who has been waiting.
For our part, we have spent the last twelve months introducing more new products than we had in the previous five years combined. The Lincoln Precision7 upgrade, Havelock, Parnell in velvet, the Tokoroa pine range, the Takapuna kitset base, the new colour extensions across our headboard programme. Most of these have been designed within what we call our affordable luxury positioning, which is a shorthand for well built products at prices that do not assume the customer is buying their last ever bed. Each of those introductions was decided when the market was still slow, and each is now arriving in market at exactly the moment the market is starting to move. That timing was not luck. It was a bet that the recovery would come, and that the stores with refreshed ranges would pick up disproportionate share when it did. The December numbers are the first clear evidence that the bet is landing.
There are real strengths in the model that has served New Zealand bedding for the last twenty years. The showroom, the sleep test, the local retailer who has stood behind their product for decades, the supplier who answers the phone. Those strengths matter more, not less, in a recovery that is starting to accelerate. The question is what those strengths look like a decade from now. We will be writing about that throughout 2026.
What is next
More from us in early February, after the summer break. By then we will have the January consumer confidence reading, a clearer picture of how December and early January have played out on the showroom floor, and the shape of early 2026 will be visible enough to start writing about properly.
Our office and warehouse are closing on Friday 19 December and will reopen on Monday 5 January. Thank you to everyone who has supported us through another challenging year. We genuinely think 2026 is going to be a better one, and we are looking forward to working alongside you through it.
Merry Christmas and happy holidays.
Sources cited: ANZ Roy Morgan Consumer Confidence, December 2025 release (18 December 2025); Dreamland trade communication, “Before the Christmas rush: a short update from Dreamland”, 1 December 2025; RBNZ Monetary Policy Statement, 26 November 2025; RBNZ Monetary Policy Review, 8 October 2025; ANZ Roy Morgan Consumer Confidence, October 2025 and November 2025 releases.
