Retail numbers suggest more woe in store for SA economy

Business

Retail numbers suggest more woe in store for SA economy

Painfully slow growth in consumer spending forces brutal cutbacks at some of SA's big retail names

Chris Gilmour

I am exceptionally concerned about the SA economy, and specifically the retail sector. Over just a few recent days, Edcon announced the closure of its emporium in Rosebank, Johannesburg; Massmart (https://www.sharenet.co.za/v3/quickshare.php?scode=MSM) said it would shut down Dion Wired and some Masscash outlets; and Statistics SA released retail sales numbers for November 2019 (which incorporated the “Black Friday” period) that showed an uninspiring 2.6% increase.

Consumer spending is suffering and the outlook is dismal. Sharing my fears is Syd Vianello, an independent retail analyst, who expects Massmart’s new management to continue interrogating every store’s profitability:

“There is just one question to be answered – does this marginal store have a reasonable prospect of being turned around, or not?” Dion Wired operated predominantly in a highly competitive, cutthroat, low margin, commodity type business, with high shopping mall rentals. “So its closure was an event just waiting to happen,”  says Vianello...

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