Why retail shares are losing their steam
SA retailers are finding it difficult to deal with inflation, competition and credit restrictions, writes Stafford Thomas
Tough economic times are guaranteed to show up how robust corporate strategies are. And nowhere is this truer than in the retail sector, where a battle royal is raging to capture dwindling consumer spending power. The struggle is especially fierce in the clothing retail segment, where characteristics of a permanent structural change are increasingly evident. Not the least of the factors underlying this change is a rapid decline in the use of credit to drive sales. The decline was triggered by credit retailers who responded to rising bad debts by tightening lending criteria. Government also stepped in, entrenching the decline in credit extension growth when, in September 2015, it introduced affordability regulations enforcing strict lending criteria. “They [the new credit regulations] have cost the clothing retail industry billions in lost sales,” says Anthony Thunstrom, chief financial officer of The Foschini Group (TFG). With credit hard to come by, retailers who have been traditio...
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