This year South African retail sales are better than expected.

Despite the positive growth which is expected in the country, South Africa’s economic climate remains subdued with consumers continuing to face constraints on their disposable incomes.

These constraints stem from factors such as rising inflation, volatility in the labor market, extended periods of drought, the falling exchange value of the South African rand and rising utility costs. As a result, retailers continued to review their strategies in order to remain competitive and accommodate cash-strapped consumers. These strategies include multi-channel approaches and diversifying the ranges of products and services on offer. Growth is also expected to be driven by emerging channels such as grocery retailers and internet retailing.

Rising economic pressures continue to contribute to the increasing consumer debt to income ratio in South Africa. As a result of this, consumer confidence remains weak. Due to weak consumer confidence, current value growth is slow for many retailers.

Consumers continue to make use of credit facilities in order to survive. The resultant high levels of borrowing at high interest rates have led to increasing debt levels, with value sales of largely credit-based retailers such as homeware and home furnishing stores taking a beating.