More retailers are worried they will have to shut up shop if tough economic conditions continue but hopes of rate cuts might help turn the mood around.

Retail NZ's latest member survey shows almost 43 percent are unsure if their business will survive the next 12 months, up from 32 percent the previous quarter.

Meanwhile more than 70 percent of retailers did not meet sales targets this quarter.

Chief executive Carolyn Young said it shows deepening pessimism about trading conditions.

But she says the survey closed before the Reserve Bank changed its tone on the official cash rate, which could make a difference to next quarter's results.

"So it may be that we have seen the worst, and we might be on the road to recovery and that's what we're really hope because more and more businesses are closing all the time and are really struggling with the current environment.

"We do need to see, you know, an improvement in the economy. We need to see greater consumer confidence and just the ability to jumpstart their environment so that retailers are able to continue in business."

Young said she hopes consumer confidence will build with the government's tax cuts, banks starting to cut mortgage rates, and inflation coming down.

"Confidence is an emotion, isn't it? It's based on how people are feeling. The tax breaks come through next month, so people will start to get a few more dollars in their account. Some of the trading banks have started cutting interest rates, so if someone's about to reset their mortgage hopefully it's going to get reset at a lower rate than it would have done.

"Hoping that we are over the worst of it and we're hoping that we're tracking in a way that the economy is in that strong recovery mode and we're seeing confidence return to consumers and interest rates at a lower level."

On the Commerce Commission's consultation merchant service fees for contactless payments, Young said retailers want lower fees.

But she said free transactions were a thing of the past.

"The reality is that the EFTPOS system that is free is not the future. That is the past and because it's free, there's been no development on that platform, which is why fees were brought in. What is the right level of fee is the great question to ask and that's what we're really hoping we can find out from the Commerce Commission's survey, and we'll be working with our members closely to make a submission on their behalf."