Retail trade slows dramatically in SA

Sales growth at local retail outlets slowed dramatically in September, but could have been a lot worse without cross-border shoppers, who buy goods in South Africa.

Statistics South Africa released the September retail trade sales data, which showed that sales increased by a marginal 2%, compared to the corresponding period last year.

Sales had increased by 6.6% in August. Collen Garrow, an economist at Brait Merchant Bank, said the worrying drop in domestic demand for retail goods could be attributed to the effects of the National Credit Act as well as the increase in interest rates.

However, Garrow said shoppers who came from as far off as Somalia had helped to salvage sales figures, which could have been a lot more dismal.

"Cross-border shopping can't be measured conclusively, but a cross-boarder shopping survey did find that migrant shoppers account for 2% of general sales in the local retail sector."

Garrow was referring to the Strategic Business Partnerships survey into foreigners who come to South Africa for short periods, with shopping as their main purpose.

The survey, which was released last year, found that these shoppers buy anything from clothes to car engines.

The monthly retail sales statistics measure sales in eight different types of retailers, from general dealers and food retailers, to clothing, footwear, pharmaceutical and furniture retailers, among other things.

Sales of R24.8 billion were recorded in September, from the revised R24.5bn recorded in August.

Stats SA said retail trade sales at current prices for the third quarter increased by 11.3% compared with the third quarter of 2006. Furthermore, retail trade sales at current prices for September increased by 9% compared with September 2006.

"The economy is slowing down and in a rising interest rate environment, demand for installment sales credit and retail goods is also bound to slow down," said Garrow.

Source: Daily Dispatch

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