Statistician-general’s view on the state of SA retail sales
SA consumers will need to spend in a way that helps households get their money’s worth
In September 2020, Risenga Maluleke, statistician-general and head of Stats SA, announced that the SA economy had contracted by an annualised 51% in the second quarter of 2020 as a result of the strict lockdown measures imposed. Maluleke said it is also the first time in SA’s history that the economy recorded negative growth in four consecutive quarters.
What Stats SA says about the retail sector
Zooming in on the retail industry, Stats SA also paints a similar picture of gloom and decline. From its recently published retail trade sales findings, retail sales decreased by 4% year-on-year in November 2020. Sectors such as food, beverages, tobacco and retailers in the textile, clothing, footwear and leather goods industry were the worst hit.
For both SA consumers and business owners, finding ways to cushion this devastating blow and contribute to the floundering economy is imperative.
What can SA consumers do?
Understandably, purchasing power is at an all-time low, so changes in consumer behaviour are expected and even necessary. However, the nature of the behavioural change in spending habits is what is important.
Despite how difficult things get, groceries, clothing and other household necessities remain essential. The key is not to succumb to hoarding savings in the hope that the economy will suddenly take a positive turn, as this is unlikely to happen. SA consumers will need to stay committed to spending in a way that helps households get their money’s worth in today’s economy.
This could include taking advantage of Ackermans’ specials where there are two-for-one deals and raised collar shirts starting at R69, and other discounts by large retailers and small businesses. These specials are a common business practice and have become more regular due to the pandemic’s impact on retailers’ abilities to turn a profit.
Conscious consumer shopping behaviour will contribute positively to improving sales.
What the government has done and should continue doing
In the long run, it won’t matter how much South Africans adopt better spending habits without the government’s aggressive and efficient economic recovery plans.
The government, in partnership with the private sector, has implemented multiple relief packages and financial assistance measures. Commercial banks and the SA Reserve Bank have contributed to providing market liquidity and improving credit flow in households by providing interest-free loans, making adjustments to policy rates, and offering temporary payment holidays.
Ensuring the survival of small businesses is also essential to resuscitate the economy. The department of small business development made more than R500m available to SMEs to help small business owners offset their outstanding debts and payments, and keep afloat.
Other relief measures include a Covid-19 loan guarantee scheme in partnership with National Treasury, and the provisions in the now promulgated Disaster Management Tax Relief Act 2020 and the Disaster Management Tax Relief Administration Act 2020.
A key tax intervention, targeted at SMEs, allows tax-compliant businesses with a turnover of R50m or less delay 20% of their employees’ tax liabilities and a portion of their provisional corporate income tax payments without penalties or interest over a stipulated period of time.
The government has to continue to find ways to uplift South Africans and help them get out of debt traps to strengthen purchasing power and improve retail sales.
A number of sectors are already experiencing a return to growth due to the easing of lockdown restrictions. Third-quarter figures for 2020 provided by Maluleke indicate the economy is on an upward turn and a rebound is imminent.
“The surge in economic activity in the third quarter may seem impressive, but it comes off the very low base recorded in the second quarter. SA industries still have a long way to go before reaching levels of production seen before the pandemic. Despite the rebound, the economy is still 5.8% smaller than it was at the end of 2019,” says Stats SA.
Even if accompanied with caution, there is hope and evidence that industries, including the retail industry, will experience strengthened economic activity as SA households start to spend more freely.
This article was paid for by Latest Specials.