You are here:Home/Media Centre/Latest news
Back to news results
Low economic growth is affecting the way people spend their money, and the prospects of retailers selling everything from groceries to jewellery, according to research carried out by Broll Research, a division of the Broll Property Group.
The Broll research confirms the financial strain experienced by almost all consumers, with high household debt being a strong factor. It concludes that consumers are increasingly price-conscious particularly of rising electricity prices, high fuel costs, inflation and interest rates, all of which affect the disposable income available to them, placing increased pressure on their spending budgets.
South African consumers are spending less and less every year, a pattern that has remained unchanged for the last five years. The decline in spend has had an impact on both essential and non- essential goods. This is not expected to improve in the near future according to the Broll SA Retail Snapshot Q3: 2017. Click here to download the report.
Consumer confidence was negative in the fourth quarter of 2016, improved slightly in the first three months of 2017 but dipped again in the second quarter making the outlook negative.
Miscellaneous goods and services, food and non-alcoholic beverages as well as housing and utilities (electricity, water, rates, liquid fuels), all increased in price.
Broll’s third-quarter research shows that grocery/supermarket retailers have experienced a lesser decline in growth, with sellers of beauty products and retailers of homeware and furniture recording the biggest declines.
Using trading density data (Rands spent per square metre of store size (R/m²) adjusted for inflation, Broll researchers found that the average monthly trading density over the past five years of retailers of accessories, jewellery and watches was the highest at R4, 567/m² which it attributes to the smaller sized stores of such tenants.
Grocery/supermarket retailers came in second highest at R3, 800/m² - likely attributable to their selling essential goods. This was followed by beauty and apparel retailers, R2, 320/m² and R2, 237/m² respectively with the lowest amount calculated for retailers in homeware and furniture at R1, 814/m².
However, all these retailers experienced a decline in year-on-year average trading density growth across a five-year period, but with grocery/supermarket retailers recording the smallest decline at 2.3%. Beauty products together with homeware and furniture were hardest hit at 5.6% and 5.2% respectively.
This latest research clearly indicates that consumers are considering “luxury/want” purchases with greater circumspection, but it is evident that they are continuing to tighten their belts across the board, with the broader South African retail market taking an unwelcome knock.