Johannesburg - Fears of job cuts and poor credit are driving South African Christmas retail sales towards their worst levels in nearly a decade, analysts say.
"We have got to bear in mind we lost a million jobs this year. Not to mention the informal job losses, those have been unquantifiable to us," said Evan Walker, retail analyst at RMB Asset Management.
"I think we're looking back probably 8-10 years just to see levels of nominal growth that have been as lacklustre they are now."
South Africa emerged from its first recession in 17 years in the fourth quarter but consumer spending is expected to remain depressed ahead of the Christmas holiday period.
Demand for credit by South African companies and households fell by 0.42 percent year-on-year in October, the first decline since 1966 and suggesting the recovery from recession will be slow.
"I'm spending less (this festive season). If I spend more, what (will happen) if they retrench me at work?" Kgoitsemang Lindelwa, 23, who works as a data capturer, told Reuters at a mall in Soweto, South Africa's biggest black township.
"The recession is not over. They are still retrenching. I'm avoiding credit (because) if I lose my job, how will I pay it back?"
President Jacob Zuma on Thursday raised the prospect of more job losses as the global economic downturn continues to have an impact.
Shopping less
Ponds Classens, who runs a catering business, said her shopping this Christmas would definitely be lower.
"We are most definitely shopping less," she said. "We are buying in packets and not pushing trolleys. We are not free with our spending."
South African retail sales fell by 5.1 percent year-on-year in September at constant prices, compared with a revised 6.5 percent decline in August and decreased by 5.2 percent in the three months to September.
Nedcor Securities retail analyst Syd Vianello said consumer spending would be dampened by tight credit.
"Consumer spending is not going to be driven by increased credit facilities this Christmas compared with the last number of years, where an abundance of bank and retailer credit has stimulated a lot of consumer spending," Vianello said.
Some analysts predict Africa's biggest grocery chain Shoprite Holdings Ltd and low-end store will benefit this Christmas. The grocer reported a 15.3 percent increase in turnover for the three months to end-September.
Others believe apparel retailers like Mr Price, known for cheaper clothes, will reap the best margins.
The clothing and homeware retailer posted a 15.1 percent rise in half-year headline earnings per share.
"You could see good figures on the food and liquor side of things again," said Abri Du Plessis, chief investment officer at Gryphon Asset Management.
"It is definitely going to be Shoprite, Spar, Pick 'n Pay - and in that sequence as well."
Analysts said durable goods retailers were expected to face the toughest trading conditions as demand for furniture and expensive electronic appliances remained weak.
South African furniture retailer JD Group posted a 85 percent drop in full-year profit, while Massmart - the owner of Game and Makro chain stores which sell electronic and household goods - forecast a fall in first-half headline earnings per share.
- Reuters