Page 5 - HGR January 2017 HIGH
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Leading indicators point to improved
conditions for retail in 2017

 Hiring the right people                    Commenting on the research,              cult trading conditions over the festive
                                          Amanda Stops, CEO of SACSC, says:          season.
  to manage a business                    “The SACSC economic brief highlights
                                          the direction the overall economy is         “Growth in sales of discretionary
  has been identified by                  taking and how this impacts retail         items is expected to show further
                                          and consumers. It adds to the useful       weakness in the early months of 2017,
  experts as one of THE                   and growing body of knowledge we           while growth in the sales of essential
                                          commission and compile to guide and        items is likely to slow,” says Luüs. “Du-
  things that makes or                    inform our members.”                       rable goods consumption may show
                                                                                     somewhat stronger growth off a very
  breaks the enterprise,                    The research brief quotes the latest     low base.”
                                          EY/BER Retail Survey, which shows
    and it seems to be                    that conditions in the retail sector         The SACSC research indicates that
                                          improved during the third quarter of       real household consumption expen-
   becoming more and                      2016 after a sharp deterioration in the    diture growth in 2017 is forecast to
                                          second quarter. This survey revealed       amount to 1.7% compared with the
   more difficult to find                 that a total of 43% of retailers reported  estimated growth of 1.2% which will be
                                          being satisfied with prevailing condi-     recorded in 2016.
    those right people.                   tions which was up significantly from
                                          26% in the previous period.                  Semi-durable goods - mostly cloth-
This is according to research under-                                                 ing and footwear - could experience
taken for the South African Council of      “Improved conditions were most           an increase of only some 1.0% year-
Shopping Centres (SACSC) by Christo       notable in the non-durable goods cat-      on-year in real terms in 2017, while
Luüs of Ecoquant.                         egory, signposting that people seem to     durable goods expenditure - including
                                          be switching spend away from the du-       furniture, appliances and private vehi-
  This cautiously confident outlook is    rable and semi-durable sectors,” says      cles - could rise by around 1.5%. Growth
supported by the Reserve Bank’s busi-     Luüs in the SACSC Economic Brief.          of spend on non-durables is expected
ness cycle indicator, which points to                                                to amount to 0.5% year-on-year.
some improvement lined up for 2017.         He points out that consumers’ real
                                          disposable remains under pressure,           SACSC is the official umbrella body
  Among the positive influences, the      while high food price inflation is caus-   of all involved shopping centres,
SACSC Economic Brief lists the respite    ing them to reprioritise spending on       including: owners, developers, man-
in the violent and destructive student    essentials. As a result, retail sales      aging agents, brokers, professionals,
protests, an unchanged credit risk rat-   volume growth has slowed over recent       retailers, marketers, service provid-
ings by Fitch and Moody’s albeit with     months.                                    ers, financers and researchers. It was
a negative outlook from the former,                                                  officially launched in 1991 to advance
and political developments which could      Luüs notes: “Weak underlying             the retail and retail property sectors of
lead to an improvement, over time, for    consumer demand is flagged by weak         South Africa.
the prospects of a reduction in corrup-   job creation, slow disposable income
tion and ‘state capture’ activities.      growth, slowing credit extension and         SACSC promotes the interests of the
                                          low consumer confidence levels.            sector both in South Africa and inter-
  Even so, it cautions that formidable                                               nationally, while addressing issues and
obstacles to generating sustained high      He adds: “As retail sales inflation      meeting challenges within the indus-
levels of economic growth remain the      continue to rise, consumers’ purchas-      try. It engages with associated sectors
declining levels of fixed capital forma-  ing power will be eroded.”                 and other stakeholders on behalf of
tion together with a growing public                                                  its members and highlights the role of
sector and very little attention to the     These factors point real spend-          shopping centres as a major resource
plight of small businesses, which add     ing growth remaining subdued in            for all communities in South Africa.
up to negative prospects for improved     the fourth quarter of 2016 and early
employment conditions.                    months of 2017. This also implies diffi-

                                          JANUARY 2017 | HOME GOODS RETAILER
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