Recent data from one of South Africa’s biggest banks, Nedbank, shows slowing retail sales reflecting a population that is feeling a slump, with little money more to spend – and this situation is likely to continue into the next year.
The bank reported that retail sales growth slowed to 2% in August from a year earlier. That’s shockingly lower, falling short of Nedbank’s forecast of 3% and well below the 8.9% gain seen in July.
“Retail sales continued to recover from riot-induced volume slump in July 2021, but underlying momentum remained lackluster in August. Among seven sales categories, growth sales were lower in four categories and negative in other categories.
Nedbank reported that in the three months to August, the following sales changes were observed:
General agent (+2.6%)
Textile, Footwear ( + 8.4%)
Hardware, paint and glass (- 5.8%)
Pharmaceuticals, medical products, cosmetics and toiletries (-2.2%)
Nedbank expects Stores will continue to sell fewer items, and growth will be muted for the rest of 2022 and into 2023.
“High inflation and slowing economic growth will weigh on disposable income, while rising interest rates and a weak labor market will keep overall consumer confidence low.”
“We therefore expect households to be prudent in their spending, especially on discretionary goods. Retail sales should get some support from the year-end drop, but volumes are unlikely to be significantly higher than in the same period in 2021.”
The drop in retail sales has an impact on the mall. John Loos of FNB Commercial Property Finance notes that malls are struggling, with those serving essential needs like food and groceries feeling the pressure.
Loos said larger types of regional centers may end up at a relative disadvantage compared to many neighborhoods and convenience centers in this regard, as they typically focus more on clothing and shoes footwear, fashion and leisure of various types, as well as households. retail furniture and appliances, all of which can be cyclical and under pressure during tougher times.
Cash-strapped South Africans are feeling the pinch and are set to take another hit to their wallets, with annual consumer price inflation slowing slightly from 0.1% to 7.5%, but Food price inflation continued to accelerate rapidly, reaching 11.9% in September. , according to Statistics South Africa.
This will only prevent consumers from spending money on expensive goods. NielsenIQ’s latest Retail Country Report shows that consumers are changing the way they shop.
New survey shows that shoppers:
are venturing into stores half as much as before;
Search for bargains, buy promotional items;
Look for retailers that offer the best overall shopping cart – not individual items; and
started removing expensive items from their carts
