Bleakest Christmas in a decade

Johannesburg - The first signs of Christmas can already be seen in shopping centres, but retailers have scant hope of a joyous festive season.

According to Luke Doig, a senior economist at Credit Guarantee Insurance Corporation, retail sales over the Christmas period could be the worst in more than a decade.

Real retail sales for the first eight months of this year were 4.8% down on the first eight months of 2008. This despite the interest rate declining by five percentage points since last December.

"There is little doubt that a dismal peak spending period lies ahead for retailers," said Doig. "It will require a serious effort from them to retain market share."

According to Doig, household indebtedness as a percentage of disposable income has marginally diminished so far this year.

Debt-servicing costs as a proportion of disposable income may have shrunk from 11.6% in 2008 to an estimated 9% this year, but the consequences of the recession, such as growing unemployment, have put a damper on any positive effect.

Doig reflects that the contribution of Christmas turnover in 2005 peaked at 21.4% of retail sales for the year. Last year the figure was 20.6%. He says that - despite lower inflation and interest rates ? he expects real Christmas sales to be 4% down on last year's.

Doig believes low stock levels could lead to the purchasing of stock, possibly helping wholesalers over the Christmas period. Wholesale sales fell 12.4% year-on-year in August. But this was considerably less than April's 16.3% year-on-year decline.

- Sake24.com

For more business news in Afrikaans, go to Sake24.com.