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Textile sales lead welcome growth in the retail trade sector

The positive growth for retail trade sales provides a welcome distraction from the tales of doom usually associated with the South African economy.

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Photo: General Marketing Service / Pexels

Retail trade sales were up by 2.4% year-on-year thanks, in large part, to the solid sales numbers achieved by retailers in textiles, clothing, footwear, and leather goods.

Seasonally-adjusted retail trade sales increased by 0.3% between May and June 2019 and follows encouraging month-on-month growth of 0.1% in May and 1% in April.

Retail trade growth provides some good news

While not stellar by any stretch of the imagination it is some welcome news for the struggling South African economy that has been absolutely starved of good news for the past few months.

The main contributors to the 2.4% increase were:

  • Retailers in textiles, clothing, footwear, and leather goods (contributing 0.8 of a percentage point to the total)
  • ‘Other’ retailers (contributing 0.7 of a percentage point to the total)
  • General dealers (contributing 0.5 of a percentage point to the total)

The largest growth in annual retail trade sales for the quarter were:

  • ‘Other’ retailers (5.7%)
  • Retailers in household furniture, appliances and equipment (5.2%)
  • Retailers in textiles, clothing, footwear and leather goods (4.8%)

“This was slightly ahead of market expectation of a 2.3% y/y increase. A disaggregation of the data shows that chief among the contributing categories to this improvement were clothing and footwear, general dealers and other retailers,” said First National Bank in a statement, according to Money Marketing.


The bad news

However, the news is not so rosey in every department.

“In contrast, volumes in the hardware, paint and glass category continued to slide,” FNB continued.


Thankfully the only two areas to show decline were:

  • Retailers in food, beverages, and tobacco in specialised stores (-0.1%)
  • Retailers in hardware, paint, and glass (-0.7%)

The news means retail trade sales will contribute positively to South Africa’s gross domestic product for the second quarter of 2019.

Retailers covering the cost of inflation

There are some dark clouds on the horizon though as year-to-date growth is lagging behind the same period last year, which is likely being caused by a general lack of disposable income available to South African households.

This is also shown by the retail inflation levels being below that of the consumer price inflation, meaning retailers are having to cover the cost of price increases rather than the consumer.

While this might sound good to customers, it is not a healthy situation for retailers to find themselves in as it is the profitability of their businesses that is being eroded.