July retail trade sales down 1.8% y/y
July retail trade sales dropped by 1.8 per cent year-on-year, marking the eighth consecutive monthly decline, indicating consumers remain cash-strapped. Over the three months ending in July 2023, sales declined by 2.2 per cent compared to the same period in 2022, with “general dealers” and “hardware, paint, and glass retailers”’ as the main negative contributors, while textiles, clothing, footwear, and leather goods emerged as the only positive sector. Siobhan Redford, Economist, RMB joins CNBC Africa for more.
Wed, 20 Sep 2023 16:59:53 GMT
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AI Generated Summary
- Despite an overall decline in sales, certain sectors like clothing, footwear, and leather goods are experiencing demand possibly due to competitive pricing and consumer preferences.
- General dealers and hardware retailers are facing challenges attributed to factors like high commodity prices and decreased buying amid load shedding.
- The discrepancy between retail activity and business confidence in the sector reflects a mixed outlook, with uncertainties about the future trajectory of the retail industry.
South Africa's retail sector continues to face challenges as July retail trade sales dropped by 1.8% year-on-year, marking the eighth consecutive monthly decline. This decline comes amid ongoing economic pressures, with consumers remaining cash-strapped. Over the three months ending in July 2023, sales declined by 2.2% compared to the same period in 2022. The negative contributors to this decline were 'general dealers' and 'hardware, paint, and glass retailers,' while textiles, clothing, footwear, and leather goods emerged as the only positive sector. Siobhan Redford, Economist at RMB, provided insights into these figures, highlighting the contrasting trends within the retail industry. Redford noted that despite overall sales decreasing, there is still demand for clothing, footwear, and leather goods, possibly driven by people refreshing their wardrobes as they spend more time outside the home. Additionally, competitive pricing and moderate inflation in these categories may be encouraging consumers to make these purchases. On the other hand, general dealers and hardware retailers are facing challenges, with factors such as high commodity prices and decreased buying due to load shedding impacting sales. The discrepancy between retail activity and business confidence in the sector, as reported by the Bureau of Economic Research, indicates a mixed outlook. While interest rates are expected to stabilize, creating a more favorable environment going forward, the immediate future remains uncertain for retailers. Looking ahead to Q3, Redford predicts continued difficulties for retailers, with uneven recovery across different segments of the sector. While some categories like textiles and clothing have surpassed pre-pandemic levels, others are still struggling to regain momentum. Events like the Rugby World Cup are expected to provide temporary boosts to sales, but sustained recovery will depend on factors like interest rates and economic activity. Lower interest rates and fuel prices could potentially aid in stimulating consumer spending, but these measures also carry risks. Overall, the retail sector in South Africa faces a challenging road ahead, with uncertainties about the recovery trajectory and consumer behavior.
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