Retail confidence edged down slightly in the first quarter of 2025, retreating from 54% to 50%, according to the latest retail survey by the Bureau for Economic Research (BER).
Despite the modest dip, confidence levels remain notably above the long-term average. “Half of the retailers surveyed by the BER were satisfied with prevailing business conditions, which likely bodes well for retail sales and consumer spending at the start of the year,” the BER’s press statement reads.
The latest BER data aligns with strong retail sales growth reported by Stats SA for the fourth quarter of 2024, with a 5.4% year-on-year rise. Sales were driven by semi-durable goods (up 7.7%) and non-durable goods (up 6.5%), buoyed by a combination of lower inflation, improved consumer confidence, and access to funds through “two-pot” retirement savings withdrawals.
Though confidence declined marginally, retail sales volumes held steady on a seasonally adjusted basis. The index remained at eight index points — the highest since 2014’s fourth quarter — suggesting year-on-year growth is likely to continue, albeit modestly, into this year’s first quarter.
After three consecutive quarters as the most confident sector in the RMB/BER business confidence index, optimism among wholesalers retreated in the first quarter.
Weakening sentiment was reported across both consumer and non-consumer goods wholesalers, with concerns over US trade policy weighing on expectations and reported conditions.
In contrast, the motor trade sector experienced a sharp rebound. New vehicle dealer confidence surged by 29 percentage points to 52%, supported by a solid improvement in sales volumes. Industry respondents cited declining interest rates and the use of two-pot funds for vehicle deposits as key drivers of renewed momentum.
“Sentiment turning positive in the motor trade sector, particularly amongst new vehicle dealers, is a welcome sign of improving consumer health,” the BER said.
Data from Naamsa confirmed the trend with sustained sales growth into early 2025.
Among retail subsectors, semi-durable goods retailers showed the highest confidence levels since before the global financial crisis. Hardware retailers also expressed greater optimism, consistent with upbeat signals from the BER’s building sector survey.
These gains were offset by declines in confidence among non-durable goods and furniture retailers, probably reflecting pressures faced by smaller, independent stores.
On pricing, both selling and purchase price indices rose notably compared to the fourth quarter, particularly for semi- and non-durable goods. The shift appears linked to routine price revisions and currency weakness, with the rand depreciating from R17.60/$ in the fourth quarter to R18.40/$ in this year’s first quarter — a drop that was sharper than many retailers had expected.
“The BER’s survey results paint a reasonably rosy picture of the internal trade sector overall. Retail and motor trade still have room for growth, as some consumer windfalls gained in the latter part of 2024 are expected to spill over into the first quarter of 2025,” it said.
However, on the downside, the outlook for the second quarter appeared more precarious as the expectations of retailers for the coming quarter fell, leaving vehicle dealers as the only bright spot for the second quarter, the BER reported.
“Temporary relief from two-pot withdrawals is anticipated to fade. With the Reserve Bank holding on delivering a fourth 25 basis point repo rate cut, we do not anticipate significant additional support from lower interest rates.”
Additionally, a planned two-stage VAT increase (totalling one percentage point) poses a new threat to household budgets and retail confidence.
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