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Johannesburg - Retailers are expecting shoppers to spend more this
festive season than they have in the last two years, a survey released
on Thursday showed.
"After suffering declining sales volumes during 2008 and 2009, South African retailers are expecting a more cheerful 2010 Christmas trading period," states a Bureau for Economic Research/Ernst & Young Festive Season Retail Trends survey.
The survey showed that a net majority of respondents reported higher fourth-quarter sales volumes compared with the final quarter of 2009.
"Based on historical correlation, this suggests that festive season retail sales volumes should increase by more than 5% compared with the weak 2009 holiday trading period," said Derek Engelbrecht of Ernst & Young.
This would be in line with retail sales numbers which came in higher than expected for the year to September.
"After declining by 3.4% during 2009, according to Statistics SA real retail sales have rebounded by just more than 4% in the first nine months of 2010."
However, a majority of retailers were planning to cut prices over the holidays, especially those selling durable goods - electronic goods, household appliances, furniture - and semi-durable goods, such as clothing, footwear, toys and CDs.
A slight majority of durable goods retailers expect to sell well.
This was influenced by interest rate cuts which brought the prime lending rate down to the lowest level since 1974, high wage increases and the strong recovery of domestic share prices on the JSE.
However, the fact that many retailers were reducing selling prices showed turnover was still under pressure and would reduce their profitability.
"While the retail environment is improving, continued poor retail profitability indicates that the retail sector still has some way to go before one can start talking of a return to the strong consumer spending years between 2004 and 2007.
"For a sustained retail recovery to take hold, job creation must first return," said Engelbrecht.
"After suffering declining sales volumes during 2008 and 2009, South African retailers are expecting a more cheerful 2010 Christmas trading period," states a Bureau for Economic Research/Ernst & Young Festive Season Retail Trends survey.
The survey showed that a net majority of respondents reported higher fourth-quarter sales volumes compared with the final quarter of 2009.
"Based on historical correlation, this suggests that festive season retail sales volumes should increase by more than 5% compared with the weak 2009 holiday trading period," said Derek Engelbrecht of Ernst & Young.
This would be in line with retail sales numbers which came in higher than expected for the year to September.
"After declining by 3.4% during 2009, according to Statistics SA real retail sales have rebounded by just more than 4% in the first nine months of 2010."
However, a majority of retailers were planning to cut prices over the holidays, especially those selling durable goods - electronic goods, household appliances, furniture - and semi-durable goods, such as clothing, footwear, toys and CDs.
A slight majority of durable goods retailers expect to sell well.
This was influenced by interest rate cuts which brought the prime lending rate down to the lowest level since 1974, high wage increases and the strong recovery of domestic share prices on the JSE.
However, the fact that many retailers were reducing selling prices showed turnover was still under pressure and would reduce their profitability.
"While the retail environment is improving, continued poor retail profitability indicates that the retail sector still has some way to go before one can start talking of a return to the strong consumer spending years between 2004 and 2007.
"For a sustained retail recovery to take hold, job creation must first return," said Engelbrecht.
