South Africa

Retail sales continue a downward trend

JOHANNESBURG - RETAIL sales fell for the eighth consecutive month in November, signalling the long road ahead for South Africa’s economic recovery to pre-pandemic levels.

Data from Statistics South Africa (StatsSA) yesterday indicated that retail trade sales slumped 4 percent following an upwardly revised 2.3 percent decrease in October.

The decline was more than the market expectation of a 2.5 percent fall, and was the quickest pace since August, when sales fell 4.1 percent.

Economists said while the trading environment had improved notably from levels experienced in the second quarter of 2020, momentum had slowed as relief support measures were subsiding.

FNB chief economist Siphamandla Mkwanazi said the retail sales data suggested that even shopping activity during Black Friday was more muted in 2020 compared to the previous years.

“We attribute these trends to the pandemic-induced loss of buying power and changes in consumer behaviour as people spend more time at home and limit their spending to essential goods,” he said.

Mkhwanazi said pressure on volumes will be exacerbated by the resurgence of Covid-19 infections and the subsequent reintroduction of lockdown restrictions to Level 3 in December. “These factors, combined with rising food and fuel prices, bode ill for the short-term retail sales outlook,” Mkhwanazi said.

“In the same breath, the longerterm outlook remains uninspiring, weighed on by rising unemployment and generally low consumer sentiment.”

Retailers continued to face challenges in their operating environment in November, as demand still remained subdued due to consumers’ financial uncertainty.

StatsSA said sales fell 26.1 percent for all other retailers, while textiles, clothing, footwear and leather goods declined by 5.6 percent in November.

Food, beverages and tobacco fell 2.6 percent, while general dealers eased 2.5 percent.

In contrast, hardware material and household furniture were the strongest performing categories, recording 14 percent and 7.8 percent year-onyear increases, respectively.

On a month-to-month basis, retail sales rose 1.8 percent in November after an upwardly revised 0.5 percent drop in October, and 1.1 percent in September.

In the three months ended November 2020 retail sales declined by 3 percent, compared with the three months ended November 2019.

Investec’s Lara Hodes said that base effects were partly responsible for the disappointing reading.

Hodes said the winding down of Covid-19 assistance measures by the government will weigh further on those who have lost their jobs during the pandemic and those in lower income brackets.

“Renewed restrictions imposed by government during the festive season, likely, markedly impacted retail activity, particularly in hotspot regions.

“Thus, we are anticipating a lacklustre end to the year. The imminent vaccination rollout offers some optimism for 2021, however a return to pre-pandemic levels of activity will likely be protracted.”


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