Retail sector set for more tumbleweeds and dust motes

Business

Retail sector set for more tumbleweeds and dust motes

Shopping will stay in the doldrums and share prices won’t move until the economy starts improving

Chris Gilmour

Against a backdrop of poor economic growth, unlikely to change soon, the outlook for consumer spending and hence JSE-listed retailers is not inspiring. This was the opinion of a “Masterclass” on the JSE retail sector, hosted by the Investment Analysts Society. I was a panel member along with highly respected analyst Syd Vianello.

Although the retail sector has modernised significantly, it has made poor strides in the private label/house brand space. In SA, private label sales have remained static at about 15% of total sales, compared with the US and UK, where private label sales are about 50% of total sales.

Private-label products in SA sell for only a small discount compared to the price of branded products. This contrasts to the UK where the differential tends be 30% to 50%, making house brands compelling and far cheaper buys...

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