Malls expect a better 2017

THE South African Council of Shopping Centres says positive signs for the economy have increased hopes of improving trading conditions next year, leading to indicators pointing to improved conditions for the retail sector.

The council’s “economic brief ” lists the respite in violent and destructive student protests, an unchanged credit risk ratings by Fitch and Moody’s, and political developments as some of the positive influences for next year’s outlook.

The research brief quotes the latest EY/Bureau for Economic Research retail survey, which shows that conditions in the retail sector improved during the third quarter this year after a sharp deterioration in the second.

South African Council of Shopping Centres chief executive Amanda Stops said an improving economy had a positive impact on the retail sector.

“The economic brief highlights the direction the overall economy is taking, and how this impacts on retail and consumers,” Stops said. “It adds to the useful and growing body of knowledge we commission and compile to guide and inform our members.”

The council’s research indicated that real household consumption expenditure growth next year was forecast to amount to 1.7% compared with the estimated growth of 1.2% that would be recorded this year.

Researcher Christo Luus noted that consumers’ real disposable income remained under pressure.

Luus said that as a result, retail sales volume growth had slowed over recent months.

“Improved conditions were most notable in the non-durable goods category, signposting that people seem to be switching spend away from the durable and semi-durable sectors,” he said.

“Weak underlying consumer demand is flagged by weak job creation, slow disposable income growth, slowing credit extension and low consumer confidence levels.

“As retail sales inflation continues to rise, consumers’ purchasing power will be eroded.”

The South African Council of Shopping Centres said semi-durable goods – mostly clothing and footwear – could experience an increase of only 1 percent year-on-year in real terms next year, while durable goods expenditure, including furniture, appliances and private vehicles, could rise by around 1.5 percent.

The council is the official umbrella body of all involved shopping centres, including owners, developers, managing agents, brokers, professionals, retailers, marketers and service providers. –