Consumers spending on food and clothing pushed retail sales higher in May, but South Africans still seem wary to spend too much on non-essential items. Spending at general dealers, which includes spending at big retailers such as Pick n Pay and Shoprite, provided the biggest boost to spending compared to a year ago.
Textiles, clothing and footwear and the category for ‘other retailers’, were also positive contributors. Spending on household furniture, appliances and equipment was the category with the most relevant negative development, compared to a year ago.
Stefan Salzer, partner and md at the Boston Consulting Group (BCG), says it is a positive sign that most retail spending categories showed increased sales compared to a year ago.
“It seems that consumers may not be feeling the pinch as much and may be more confident than many analysts believe. Spending on textiles, clothing and footwear climbed by 6%, compared to a year ago. We usually see spending in this category improving when people feel that they have some cash to spend.”
Textiles clothing and footwear made a positive contribution of 1.3% to the overall increase in retail trade sales, compared to a year ago. Salzer says this in keeping with recent research BCG conducted in March this year that showed that 8 out of 10 South African consumers remain optimistic about the future. The research also showed that 43% of consumers felt that they had more purchasing power compared to a year ago. “At the same time we also saw that consumers are differentiating how they choose to spend their money and we see this reflected in lower discretionary spending.”
Sales of household furniture, appliances and equipment were 8.7% lower than in May last year at constant 2012 prices. This was the third consecutive month in which spending on these items was lower on a year-on-year basis and this category dragged overall retail sales in May down by 0.4%, compared to a year ago.
“This shows that consumers know we are not completely over the hump yet. They are cutting back on purchases such as furniture and appliances, which can be delayed by a few months. This may be because they are still expecting more difficult times to come,” concludes Salzer.
