Sales News South Africa

Glum retail season ahead for shoppers

The sound of Boney M's Christmas album wafts through the air, stores are stacked to the rafters with gift offerings and malls give the impression of a jackpot festive season for SA's retailers.
Glum retail season ahead for shoppers
© Cathy Yeulet – 123RF.com

But fewer tills are set to ring this Christmas as firms prepare for a bleak festive trading season.

Shoppers are looking for greater value, are far more discerning and price-conscious than in the past, and household budgets are under strain because of a moderation in income growth, rising living costs and mounting debt.

This means more bargain hunting as frugal shoppers try to make their rand stretch.

The majority of retailers in the EY/Bureau for Economic Research's festive season retail survey signalled that growth in sales volumes is significantly lower in the run-up to Christmas compared to last year, despite efforts to contain selling price inflation.

"All retailers indicated that, in their expectations, retail sales growth will disappoint in the run-up to Christmas ... A barrage of negative developments has been weighing on the spending power of consumers since the beginning of the year including job losses, tighter credit conditions, higher personal income tax and indirect taxes, slower growth in government wages and social grants expenditure," said Derek Engelbrecht, consumer products and retail sector leader at EY.

A dramatic depreciation in rand exchange rates and the pedestrian performance of stock prices on the JSE, as well as rising interest rates have also weighed.

At least 250 retailers participated in the survey, conducted between 25 October and 16 November.

Engelbrecht said consumers would be likely to favour practical gifts over big-ticket items. "With retail prices set to increase, adding to the flood of adverse economic developments weighing on household income growth, most retailers expect volume growth to slow further into the new year."

Consumer spending on durable and semidurable goods is projected to come under the most pressure.

Interest rate hikes and depressed consumer confidence levels will add to the pain.

Source: Business Day

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