Guiding consumers since 2009

Recession bites into retail

By Staff Writer

Statistics South Africa tracks the economy providing information to help decision making about economics. This applies to the people in charge of the economy and the rest of us who make up the economy. Stats always lag reality so often there is anecdotal evidence before the evidence, but the latest evidence is bleak with retail sales dropping this August by 7% compared to August 2008. The simple explanation is that there is simply less spending money going around and the shops are feeling that. So who was suffering the most?

 

  • Hardware, paint and glass fell 19.2%
  • Furniture, appliances and equipment fell 9.2%
  • Textiles, clothing, footwear and leather fell 6.4%

 

In a recession people tend to plan their budgets more effectively and cut back on non-essentials. The figures show a shift in spending patterns this way, the house might well look nice with a new lick of paint, and sure, a new set of tools might be great, but these are non essentials and will tend to sell slower under the economic conditions we face. Furniture and household appliances are a sector that have relied heavily on credit. Ellerines was bought by African Bank because they realised that fundamentally Ellerines was no longer a retailer but a credit provider.

The National Credit Act was designed to limit 'reckless lending' and prevent retail sales on credit to people who are at risk from default. Furniture sales have thus dropped. The clothing sector is also down as people forego that new party frock for a little bit of austerity and a nice home cooked meal. Some of the few sectors that rose conform to what you would expect. Food, beverages and specialist tobacco was up by 2.2%, whilst cosmetics showed the lipstick effect rising 3.4%. The lipstick effect is when women might splash out on a little luxury like a new lipstick but not on a whole new ensemble. Men's underwear sales are also more than likely flat.

Recent Articles

Featured Can you take out vehicle finance on an old vehicle?

As it turns out, creditors have several concerns regarding cars older than 10 years. Justmoney has a look at why creditors are sceptical of older vehicles and what you can do to get around this.

Should you have a living will in place?

When you hear the word will, the only thing that comes to mind is the document that states who is going to inherit you property when you’re dead. But have you thought about who’s going to decide what happens to you when you become incapacitated? A living will can help you do just this.

Know the difference between a loan and a credit facility

Choosing the correct product according to your needs is critical in making smart financial decisions. Credit options can be separated into two main categories – loans and credit facilities. But for some people, the lines can be quite blurred between the two.

Is property a good investment?

It’s good to consider whether property is a good investment. Justmoney spoke to numerous specialists to find out whether this is the case in South Africa.

Deals

DaVinci’s on Kloof Students Discount

Price: Available on request
When: Daily
Where: Cape Town

Ghandi's Backpackers and Guest Lodge 10% Discount

Price: Available on request
When: Daily
Where: Johannesburg

Fairway Hotel Happy Hour Special

Price: Available on request
When: Until 13 December 2019
Where: Johannesburg