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Retail Sales Down In December

13 February 2020 – South African retail sales fell 0.4% year-on-year in December following an increase of 2.6% in November, Statistics South Africa said on Wednesday.

On a month-on-month basis, sales were down 3.1%. They were up 0.8% in the three months to the end of December compared with the same period last year, the statistics body said. 

This is against the market estimate of 1.5%.

The decline in sales is a result of a drop in general dealers in hardware, paint and glass. This is the first decline in retail trade since December 2018, led by general dealers of 0.8% from 3.4% in November.

Investment analyst and market commentator Chris Gilmour says the poor results in the December figures are because the increase in November sales because of Black Friday took away sales from the December period.

“This is not necessarily a bad thing, but it just means that you have to lump the two periods together to gain a better insight into overall festive season spending,” says Gilmour.

Another retail analyst Evan Walker from 36ONE Asset Management says that the retail industry has been performing poorly.

“[The industry is performing] very weak overall and it is getting weaker,” says Walker. 

Siphamandla Mkhwanazi, senior economist at FNB says the drop in sales is consistent with record-high unemployment and low consumer sentiment levels.

“Under these conditions, households appear to have become highly price-sensitive and are willing to delay purchasing decisions until goods are placed on special,” Mkhwanazi says.

He adds that this, unfortunately, exerts downward pressure on retailers’ margins, further compounding the unemployment conundrum, as evidenced by a decline in employment in the Trade sector in 4Q19.

Other drop-in sales were in textiles, clothing, footwear and leather goods of 0.4% from 2.4%. and other retailers account for a drop of 1.7% from 1.2 % in November.

In contrast, increases were reported for household furniture, appliances & equipment 3.5% vs 3.2% and pharmaceuticals, medical goods, cosmetics 2.7% from a drop in November of 1.7%.

In 2019, retail sales grew 1.2% over a year ago.