Experts hear jingle tills for retailers
Upbeat economists see bumper festive season
‘TIS THE season to spend, with indications that business this time around might be up on the past year or two.
Dawie Roodt, director and chief economist of Efficient Group, said the strength of the retail sector would come as a surprise this festive season.
“It will be better … because there are signs that show that there is room to increase spending a bit. An important lesson that we have learnt was that we cannot overdo it and that we need to be more responsible with spending.
“Another thing is the strength of the rand lately, which gives us a bit of space to buy popular imported items.
“People who have a job which allows them to have a bonus at the end of the year must really consider themselves lucky because those types of things are scarce these days.
“You need to budget properly and you need to plan ahead for what you should really spend your bonus on – an example is school fees.”
Roodt said people needed to be “conservative” when spending this year but not “entirely stingy”.
People using credit cards or accounts needed to remember that January was a long month because many people were paid earlier than usual this month and would have to make do until their normal payday next month. Also, some consumers would face a big bill they need ed to pay off.
“This season we just need to be careful not overdo it like we used to three or four years back. The retail sector isn’t going to go through the roof, but I think that there will be a bit of improvement from last year.”
Isaac Matshego, an economist for the Nedbank Group in Johannesburg, said: “There are indications that festive season spending has picked up relative to the past two years.
“Rising incomes, low interest rates and attractive retail prices suggest that sales are likely to hold up relatively well in line with recent momentum. Consumer spending was up by 5.9 percent in the third quarter of this year.”
But Matshego advised consumers to be rational about advertisements that require people to buy on credit now and start to pay instalments much later.
“Taking credit now is just committing your future income to today’s consumption.
“This means consumers need to be careful about over- consuming as this leads to overindebtedness and creates a future debt burden.”
Matshego said that even though consumer spending was up, high household indebtedness was likely to keep the lid on consumer spending this festive season.
“Household indebtedness as a ratio of disposable income stood at 78.5 percent in the third quarter of this year,” he said.
Matshego advised consumers to keep a tight rein on their budgets and only buy items that they really needed and had budgeted for.
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RETAIL THERAPY: Shoppers in a Cape Town department store patiently wait in line to pay for their purchases.