Latest Report Counts Factors for Regained Retailers’ Confidence in South Africa

High consumer spending has brought back the smile on the faces of South African retailers. Retail volumes posted good growth in Q2 2007 and are expected to tread the same path in the future too.

Delhi, India, September 27, 2007 --( Higher consumer spending in the second quarter of this year has brought back the confidence of South African retailers and this is despite the high interest rates.

“South African Retail Industry Forecast (2007-2011) ", an extensive market research report published recently by the leading market research company RNCOS, has identified stable monetary and fiscal policy, high credit sales, negative saving level, and the emergence of strong black middle socio-economic class as the forces propelling the consumer spending in South Africa and is bringing a change in spending pattern.

The data from the Bureau for Economic Research (BER) also proves this; according to it, retail confidence has spiked to 91 index points (this is equal to level achieved in quarter four of 2006) from 87 index points in the quarter one in 2007.

There are other reasons too for this appreciation in consumer confidence. Linette Ellis, senior economist at BER, opined that the hike in consumer spending was sparked by a combination of credit and disposable income, as reported by all And appreciation of salaries above inflation level also pushed the real disposable incomes in line with growing spending.

But according to Statistics SA (the official statistical website of South Africa), the retail volumes slowed down a little from previous year’s volume growth of 9.6% to 9.5% on year on year basis in the Q2 of 2007. This slump, as per the RNCOS report, is a result of some growth containing factors, including negative population growth.

Segment-wise, non-durables like food and beverages registered good growth while sales of semi-durables sector like footwear and clothing bounced back in the second quarter of 2007. Durable sector (household appliances, electronic goods, and furniture), the most sensitive retail category towards hike in interest rates, slumped slightly from the outstanding pace it clocked in during 2006 end and in Q1 of this year.

On the whole, retailers anticipate concrete and continuous growth in the Q3 of this year, Business Report quoted Linette saying on June 22, 2007. The RNCOS report predicts the whole retail industry to grow at a CAGR of over 5% from 2007 to 2011.

The report also examines the areas this swelling South African retail industry will affect favorably and discusses the future vistas.

About RNCOS:

RNCOS, incorporated in the year 2002, is an industry research firm. It has a team of industry experts who analyze data collected from credible sources. They provide industry insights and analysis that helps corporations to take timely and accurate business decision in today's globally competitive environment.

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