What you need to know about the new direct marketing guidance note
Nadine Mather and Chloë Loubser
Research from SACSC indicates 4.5% growth in retail for 2012
The South African Council of Shopping Centres (SACSC) has released its economic report for Q1 2012, which indicates that low interest rates and rising disposable incomes could push retail sales in South Africa to 4.5% growth in 2012 and even higher in 2013. It points to global uncertainties, combined with rising unemployment and crippling strikes in South Africa, as key factors hampering investment and damaging consumer confidence.
"Heightened profitability and the expectation of higher real wages will likely benefit the retail sector going forward," says general manager Amanda Stops. "But the big risk factor remains the Eurozone and if that implodes, all bets are off."
The Council's base view is that economic growth in 2012 could be supported by a slightly weaker exchange rate but inflation is likely to remain a problem, along with the risk of increasing unemployment.
Positive latest numbers
Retail sales growth increase 6.8% year-on-year in November 2011, with retailers of hardware, paint and glass seeing an uptick of almost 18%.
"Certain economic factors are especially important for the retail sector and highlight some key opportunities," points out Stops.
Interest rates remain at their lowest levels in almost four decades, which has helped push overdrafts, credit card spending and personal loans to 12.6% growth year-on-year in November 2012.
"We've also seen instalment finance - mainly for vehicles purchases and durable goods - grow by about 10% over the same period."
A buoyant pace of spending on durable goods is also evident in the latest numbers on household consumption. "That means households have been spending more on personal transport equipment, computers and recreation and entertainment goods," she explains.
Households may be able to shop more, thanks to an expected improvement in real wages, as well as overall lower household debt levels in South Africa, largely because of lower interest rates.
"Nonetheless, we are closely watching domestic employment levels, which are currently depressed, and of course the big proviso is that the European economy doesn't spark a global recession," she concludes.
The publication is available for SACSC members.
