Retail sales for April contracted by 2.5 percent year-on-year (y/y), saved from a significant slump by a robust performance of the textiles, clothing, footwear and leather goods, household furniture, appliances and equipment sectors.
According to data from Statistics SA (StatsSA) released yesterday, the contraction in retail sales follows a revised 2.2 percent expansion in February, which economists said was disappointing.
On a month-on-month basis, sales were down 3.7 percent and in the three months to the end of March, sales decreased 1.3 percent compared with the same period in the previous year.
Investec economist Lara Hodes said yesterday that the slump in activity within the general dealers’ and all other retailers’ categories was primarily responsible for March’s disappointing reading.
“Specifically general dealer sales fell by 9.3 percent y/y in March and owing to its large 44.9 percent weighting in the retail basket, it detracted a marked 4.5 percentage points from the headline number,” she said.
The robust performance of the textiles, clothing, footwear and leather goods, household furniture, appliances and equipment sectors contributed 26.7 percent y/y and 30.2 percent y/y respectively, adding a combined 4.5 percentage points to the top line outcome, preventing a far worse year-on-year decline.
“Indeed, sales of household furniture, appliances and equipment continue to benefit from the work from home dynamic,” Hodes said.
FNB senior economist Siphamandla Mkhwanazi said the decline was mostly limited to categories that benefited from panic buying last year. He said these included retailers in pharmaceuticals and medical goods, cosmetics and toiletries, which slid 10.7 percent and general dealers 9.3 percent.
He noted that other retailers continued to see declining volumes, recording -18.5 percent y/y in March.
“In our view, these are driven by lockdown-impacted items (or sub-categories) such as sports and other entertainment-related goods. Furthermore, the wider adoption of work from home, and the relatively limited mobility in general, would also have damped demand for jewellery and watches, which is another sub-category within ‘Other’ retailers,” Mkhwanazi said.
Economists noted that household balance sheets were likely to remain under pressure for some time as high unemployment persisted and debt as a percentage of disposable income remained high.