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Consumer spend in 2017 was negatively influenced by the fluctuating rand as well as uncertainty in the economy and the political landscape.
In the run-up to Easter, the first major holiday of the year, consumer spend is likely to be closely monitored by the retail and shopping centre industry.

Economist and speaker Daniel Silke says there are contradictory forces at play as regards spend over the upcoming holiday.

“The VAT increase on 1 April could cause a run on bigger-ticket items as consumers attempt to beat paying the taxman extra,” he says. “So the period immediately before 1 April 2018, may see increased sales, only to dip after the 1st.

“Overall, this should make for an Easter spend that is better overall than last year.

” Adding to this is increased positive sentiment around ‘Ramaphoria’. Business sentiment has improved and the better political outcomes should add some impetus to consumers’ shopping habits,” he adds. “Having said that, levels of disposable income remain depressed and there is no dent in the broader unemployment figures to help this.”

Looking back to 2010, there was a recovery in household consumption expenditure especially during the Easter period, driven by an aggressive interest rate cutting by the South African Reserve Bank along with an economic recovery, saw real retail sales growth rise from 3,1% decline in 2009 to a 5,6% rise in 2010, and on to a post-recession peak of 6,2% in 2011.

Then, in 2015, the sector had a mild boost to growth from a dip in consumer and retail price inflation in that year, sustaining its outperformance of economic growth. That dip passed on, and the economy “reinflated” in 2016, while interest rates had been rising through 2014 to early-2016.

Daniel adds that the fuel levy will also have hard-hitting impacts on people. “The fuel levy can impose a further burden on us consumers. With a bit of currency luck, the rand should remain stable to stronger, thus offsetting the fuel levy at least for the moment.

“My overall view is increased spend to beat VAT more than anything else. The country will need a sustained period of better growth numbers, movement on economic policy, a dent in youth unemployment and also clarity in terms of public sector wage negotiations before there is any major uptick.

“I am cautious on increased spend, but there will be enough to please most retailers who may view this as the turning point of a rather disappointing cycle,” Silke adds.