The retail sales figures from Stats SA are full of interesting data. The momentum in consumer spending, reflected in robust retail sales growth during the second half of 2024 and the earlier part of this year, appears to have slowed down considerably.
Much of that improved spending last year was due to load-shedding ending, with the minibonanza caused by the release of funds from the so-called “two-pot” pension fund reorganisation. Both events have now steadied and year-on-year comparisons are more normal.
Year-on-year retail sales growth for June at constant 2019 prices was only 1.6%, compared with 4.3% in May and 5.2% in April. Spending on discretionary items such as clothing and furniture & appliances has held up remarkably well, with the only declines being in staples such as food and food-related categories.
The strongest category in June was furniture & household, appliances & equipment, with year-on-year growth of 6.9%, after 6.8% in May and 8.8% in April. This category has been consistently strong for many months, aided by the availability of credit to buy big-ticket items such as furniture & bedding, televisions & audio.
This is reflected in the continuing strength of the only pure-play JSE-listed furniture & appliance retailer, Lewis Group. Of all the categories of retail spending this is the most discretionary, as it often involves expenditure of many thousands of rand and purchases are rarely if ever made on a whim.
The second-strongest category was hardware, paint & glass, a proxy for home improvement/DIY. This category has been stagnant for a few years. There have been many “false starts” in the past few years, when it seemed as if growth was about to resume in this sector, only for subsequent months to exhibit negative growth.
However, not only is there a visibly shallow uptrend in the data, but the year-on-year growth for June at 5.4% was one of the strongest upturns this category has exhibited in at least four years. And the two main JSE-listed companies in this sector, Cashbuild and Italtile, recently posted surprisingly stable results. This category may thus possibly be at the beginning of a positive turnaround.
The third-best performing category was clothing, footwear, textiles & leather (CFTL), which grew 4.6% year on year, after 12.6% growth in May and 12.1% in April. Like furniture & household, this is a discretionary category and some of the retailers in the survey offer credit to buy their merchandise. This category has been generally strong for many years, though punctuated by periods of negative growth when competition from extremely cheap Far Eastern online retailers such as Shein and Temu were at their peak.
However, on balance the local SA retailers have been able to hold their own in this intensely competitive marketplace, as evidenced by the generally positive trend of the category. In Stats SA’s sampling method online retailers such as Shein and Temu’s turnovers would not be included in the CFTL category.
Coming in just behind CFTL at 4.2% growth is pharmaceutical & medical goods, cosmetics & toiletries. Shown graphically, the pattern is similar to that of hardware, paint & glass, with a gradual uptrend evident in March 2024. This is also reflected in the continued strength of the main JSE-listed companies in this category, such as Clicks and Dis-Chem.
This really just leaves the two food and food-related categories — general dealers (minus 0.2%) and food, beverages & tobacco in specialised stores (minus 4.5%). While both are negative, they are well within historical norms when shown graphically. As usual, the hodgepodge of “all other retailers”, which includes online retailers, doesn’t include anything of particular interest, at year-on-year growth of 2.3%.
• Gilmour is an investment analyst.
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