Survey shows 'lively growth' in SA durable goods

14 Sep 2012

According to the Ernst & Young/Bureau of Economic Research (BER) Retail survey‚ the third quarter of 2012 (2012Q3) saw some "lively" growth in the durable and semi-durable goods in the South African retail sector.

The survey results showed that semi-durable goods retailers had seen the largest improvement in the overall profitability levels since the end of 2011.

"Not only are clothing and footwear retailers seeing strong volume growth‚ they are also able to pass their cost increases on to customers in the form of higher selling prices‚ thereby preserving their profit margins‚" said Derek Engelbrecht‚ retail and consumer products sector leader at Ernst & Young.

"The slowdown in non-durable goods sales growth since the first quarter of 2012 can in all likelihood be ascribed to the lacklustre pace of job creation during the first half of 2012 and high - albeit decelerating - food and beverage price increases‚" said Engelbrecht.

According to the survey‚ during the third quarter of 2012‚ the percentage of retailers reporting that they were satisfied with prevailing business conditions improved from a two-year low of 39% to 46%‚ partially reversing the large fall registered during 2012Q2.

The survey showed that in the second quarter‚ a moderation in retail sales growth‚ coupled with a substantial escalation in the eurozone debt crisis and concomitant deterioration in the outlook for global economic growth‚ saw retailer confidence plunge by 22 percentage points‚ from 61 to 39.

According to the survey‚ rapidly rising Chinese wages‚ a depreciation in the rand exchange rate and the lagged impact of higher cotton prices had pushed clothing and footwear prices significantly higher over the last year.

"In sharp contrast to durable and non-durable goods retailers‚ who indicated that they will implement lower price hikes during the festive season to attract customers‚ semi-durable goods retailers seem confident that they will be able to increase their selling prices at roughly the same tempo during 2012Q4‚" the survey found.

Source: I-Net Bridge

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