Retailers upbeat about consumer spending this festive season

By Staff Writer
The results from the Bureau for Economic Research/Ernst and Young festive retail trend survey shows that South African retailers expect a more cheerful and profitable Christmas trading period this year .

The survey indicates that consumer spending will be moderate in the middle to lower income earners but high income earners are likely to indulge. In the survey 15% of retailers said they expect sales volumes over the festive season will improve, compared to 28% who said last year that they expect sales to be down.

Economists expect retail sales volumes to increase by more than five percent. It is expected that the more interest rate sensitive categories like furniture and appliances are expected to do well.

"When we conducted the survey last year the story was different, almost a third of the respondents reported a slowing down sales growth," Hugo Pienaar, a senior economist at the Bureau of Economic Research said.

"Indications are that this festive season will be a lot better than it was 12 months ago, the positive forecast is being boosted by retail sales numbers from Statistic South Africa (Stats SA)," Pienaar added.

Figures released by Stats SA last week showed that retail sales rose by 6.1% year-on-year in September. The figures came higher than what some analysts had expected, pointing to a revival in consumer spending, fuelled by interest rate cuts and the low inflation rate.

It is, however, important that consumers remember that over-indulging could catch up with them in the New Year and erring on the side of caution is better than piling up a mountain of debt.

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