Filed under: Retail
April 17, 2008
By Tom Robbins
Cape Town – Retail sales unexpectedly increased by 2.5 percent in real terms in February, the second month in a row of rises, after declines in November and December, Statistics SA said yesterday.
Abri du Plessis, the chief investment officer at Gryphon Asset Management, said the increase did not bear out retailer and manufacturer sentiment, which was “lower than these figures”.
Du Plessis said the February rise might have been skewed upwards by the extra trading day in February on account of the leap year.
This upward trend would likely be more pronounced in March because of the busy Easter period falling earlier than usual. A more reliable picture would emerge after figures for this month were released.
Stats SA said sales in nominal terms, which included inflation, were 11.3 percent higher for the three months to February, compared to the same period a year ago.
The quarter’s supermarket sales were up 16 percent but the rise in the consumer price index for food in February was 14.4 percent, suggesting there was little real growth in sales of basic necessities.
Clothing was up 12.7 percent but the weakest category in the downturn, furniture, fell yet again, this time by 11 percent.
Evan Walker, a retail analyst at RMB Asset Management, said food volume sales were “falling off a cliff” when taking food inflation into account.
Clothing sales had propped up sales figures, as struggling retailers marked down clothing from January sales well into February.
Walker believed chicken sales had turned negative. This is an important meat protein source for the bottom end of the market.
Meat protein was only the start of the pressure on food sales, but sales of basics such as maize and bread were holding up, he said.
Higher fuel and grain prices had yet to feed through to the supermarket level.
Walker said it was even possible that food sales would even turn negative, as they had done previously in periods of high inflation.
Du Plessis said interest rate-sensitive top-end and middle consumers were continuing to buy down on food, but the established part of the bottom end of the market might also now be buying less food per person.
However, new entrants to the labour market, as the economy continued to add jobs, could result in a rise in the overall amount in this segment.
Quarterly sales of drugs and healthcare products was the steepest climber, rising 19.5 percent, but that may be related to annual price increases early in the year.
Hardware sales, up only 6.8 percent, was the second-worst performer, suggesting that consumers were starting to feel the pinch in renovating existing homes.
The building of new houses for the middle and upper markets has long been in decline.
Sales at specialist retailers, such as butcheries and cafes, rose 8.4 percent, less than at supermarkets, indicating that consumers were buying down at retailers such as Shoprite for food and cigarettes.
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