Retail confidence at 8 year low

Johannesburg - Results from the latest Bureau for Economic Research (BER) Retail Survey reveal that retailer confidence declined sharply during the third quarter of 2009, falling from 47 to an eight-year low of 35 index points.

The downward adjustment in retailer sentiment comes after retailer confidence remained resilient around the 50 mark for six consecutive quarters, with the recorded readings only varying between 47 and 53 since the first quarter of 2008.

The BER's retailer confidence index depicts the percentage of respondents reporting that they are satisfied with prevailing business conditions.

Although the retail sector is not yet out of the woods, there are other indicators that also suggest that the worst (in terms of volume growth) may be behind us. For example, retailers made a significant upward revision to their expectations regarding sales volumes, with the majority of the BER's respondents expecting sales to improve during the fourth quarter.

BER economist Linette Ellis says that "there seems to be some light at the end of the tunnel in terms of sales volumes". She feels that while there may be a slow uptick in sales volumes during the fourth quarter, retail turnover will probably deteriorate further as selling prices remain under pressure.

"Non-durable goods retailers will be particularly vulnerable, with food prices now easing rapidly, while sales volumes could remain under pressure from job losses," she says.

The non-durable goods sector is also the sector that will receive the smallest boost from the cumulative 500 basis point cut in the interest rate.

"Although the BER's survey results suggest that retail sales volumes may start to edge higher during the fourth quarter, there are still some trying times ahead for retailers."

- I-Net Bridge