Ex­perts hear jin­gle tills for re­tail­ers

Up­beat econ­o­mists see bumper fes­tive sea­son

Weekend Argus (Saturday Edition) - - BUSINESS - STEFNI HER­BERT

‘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.

s t e f n i . h e r b e r t @ i n l . c o. z a


RE­TAIL THER­APY: Shop­pers in a Cape Town depart­ment store pa­tiently wait in line to pay for their pur­chases.

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