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SA economy shows positive Christmas signs

Sat, 24 Dec 2011 08:14

2011 is the year global economies would rather forget: the Eurozone and the United States economies reeled from crisis to crisis, and while many businesses closed their doors for good this year in South Africa and unemployment is high, there is evidence of an upturn in retailing.

Paul Kent, managing director of SureSwipe an independent credit and debit card swipe machine distributor has a unique overview of retail and professional market trends (they also serve the medical profession), “What we are seeing is an end to strong negative spending patterns of the last two years and a slow but definite improvement in confidence and spending. While this won’t be a ‘great’ Christmas for retailers, it definitely will show a marked improvement on the last two years.”

While projections in the United States, as an example, is to stagnant retail spending or a lift of less than three percent, Kent projects figures will be better in South Africa. “South Africans as a whole never bought into the culture of excess seen in the United States and so consumers and the economy is more resilient. We find it easier to cut back and then to recover.”

While many American families are foregoing turkey and ham and opting for chili (minced meat in a tomato gravy with chili), those South Africans that want a special meat dish will probably opt for one. “If anyone has ever doubted what a meat-loving nation this is then they should look at our figures, so far this year meat sales are up 19% and we project they will go up another three to five percentage points this season.

“And while less people will go on holiday they will invest more in home entertainment like game consoles, televisions, hand held computers and the like – sales of these are up 14% this year and they will probably edge up three to five percent this month. This is also the time of year when people are most likely to buy a new electrical appliance with their bonus – in December 2009 to November 2010 we say electrical appliance sales grow 86%, then plummet to only 20% last year. But comparing December 2009 to December 2010 there was still a 37% uptick in sales for these items, and we predict that figure will rise to just over 40% this season.

“The area that has shown the most worrying decrease if for food and beverages – consumers can’t cope with high food costs and it is here that many are far more budget conscious. From December 2009 to November 2010 we saw a 14% increase in food sales, but since then food sales have reversed, with a 14% decline. We’re pretty sure that trend will continue for the foreseeable future. It has seen an 18% decline in trade through supermarkets in that period, and a whopping 25% decline through wholesalers.

“What that means is that consumers no longer see the value in buying in bulk and storing. They don’t have that sort of money any more. They are very price conscious now and are shopping carefully and buying only when they need it. The days of having a big deepfreeze and keeping it full are gone for most.”

But the rich are, getting richer. There are signs that there early concerns about the financial crisis are waning – they know it will be here for some time and have taken measures to cope. “The best indicators of this are with jewellery which was hammered in the early months and years of the global financial meltdown, but from December 2010 to November 2011 we saw an 118% rise in sales through these outlets and although sales were only four percent year on year from December 2009 to December 2010, we predict that more people this year than last will find a watch or ring or some other bauble in their stocking.

“And the other indicator of that is with hairdressers, they have barely felt this crisis they saw a 21% increase in credit and debit card swipes from December 2009to December 2010 and only 11% up from December 2010 to November 2011, but they are still outperforming most other sectors of the economy.”

Kent said of particular concern was the trend in health care, “Prevention as we know is far better than cure but if we are seeing a downward trend in food and beverage sales and in health care spending it tells us two things, one that health care costs are way too high for the average consumer. They are cutting back on visits to the doctor, the dentist and other health care professionals. And because we are seeing a downward trend in food and gym purchases, it would tend to indicate that consumers are not paying enough attention to the preventative measures of health care either – eating carefully and exercising. That could create longer term problems.”

He said SureSwipe was advising retailers to price with greater care, “A huge trend in Europe and the United States are cellphone apps that allow consumers to scan bar codes on products and to tell them if the product could be obtained cheaper at a nearby store or online site. That trend will reach South Africa and wise retailers will begin preparing for it now.”