Retailers suffer a shock Christmas decline
Stats SA’s retail figures for December showed an annual decline of 1.4% instead of the expected 2.1% growth
Shoppers spent less last Christmas than the previous year, Stats SA’s retail figures for December released on Wednesday showed.
Adjusted for inflation, the annual decline in December’s retail sales came to 1.4%.
SA retail sales tend to spike sharply in December, although the growing popularity of Black Friday sales has shifted some of the shopping splurge to November — when the sector saw its most substantial jump in 11 months as a result of huge sales.
The retail sector is an important indicator of consumer spending, which drives growth in the economy as it accounts for just more than 60% of GDP.
However, consumers came under immense pressure in 2018 with the first VAT hike in two decades and steep fuel price increases.
The three-month seasonally adjusted average for the December quarter, which forms part of the country’s GDP, showed an annual increase of 0.8%.
Although economists had expected retail sales to slow down from November’s 2.9% annual growth, the consensus was for growth of about 2.7%. Few forecast a contraction.
“The best-performing sectors in November turned out to be the laggards in December, clearly suggesting that consumers have started to change behaviour to capitalise on the attractive offers on Black Friday,” NKC economist Elize Kruger said.
Pharmacies suffered the biggest annual decline of 3.1%, followed by clothing retailers, whose sales fell 2.7% in December from the same month in 2017.
Stats SA’s seven retail sectors are dominated by general retailers, which contribute 41% of the total. General retailers suffered a 1% annual sales decline.
What Stats SA classifies as “other”, its third-largest sector contributing 11% of the total, was December’s best performer, with 1.64% sales growth.
That “other” bucked the general downtrend may be evidence that e-commerce is gradually making inroads into SA’s traditional brick-and-mortar shops.
“The combination of a sharp decline in the December and January petrol price and the gradually increasing credit take up by consumers, particularly unsecured credit, to support retail sales in the coming months,” FNB economist Siphamandla Mkhwanazi said.