May retail sales expected to have small improvement - CNBC Africa

May retail sales expected to have small improvement

Southern Africa

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Supermarket chains Checkers and Shoprite released figures on Tuesday, indicating for the period to June, like on like sales were just five per cent. All retailers are also down by three to five percentage points.

 “For the last two months we’ve had very messy numbers over Easter so May really is the first month that we pay any attention to. We don’t forecast month by month but given what we’ve seen for Massmart and Shoprite we can’t expect good numbers from the food and the general dealers from their sales. Clothing I’m a bit more tentative on, possibly we’re still going to see relatively good numbers from them,” Old Mutual Investment Group South Africa (OMIGSA) retail analyst Jeanine van Zyl told CNBC Africa on Wednesday.

“We have heard from some clothing retailers saying things were pretty tough at the beginning of the year but actually started creeping up into May so I’m not sure that we’ll see bad sales on that category.”

While consumers and analysts alike would benefit from month on month analysis, Van Zyl explains that some categories in retail such as clothing trade better on holidays whereas other categories actually trade worse on holidays, which means that finding accurate month on month data as other sectors produce proves slightly more difficult.

“The one category that confounds everyone is the hardware category, which has been very strong for a while and that might continue to be strong because we often see hardware being strong in tough times. Overall the final number might be slightly higher than the 1.9 per cent we saw last month but that’s really because last month was a very messy month.”

Furniture retail numbers for the last three months were particularly weak and lower numbers are expected to continue.

“Right now in the middle and lower income groups particularly with some debt pressures on them, we think that people won’t be happy to take on further debt and in fact sometimes aren’t even passing the affordability tests to be able to take on the further debt,” Van Zyl explained.

“So much furniture and appliances sales are done on credit so if they’re not able to get the credit, they can’t make the sale and I think that those numbers are still going to be very weak in this result. I think that we’re down 4 per cent in April and I wouldn’t expect much up from that into May.”

Where food retailers are concerned, the strong customer base that companies such as Woolwoths has will be able to keep the company afloat, given that interest rates are currently quite low.

A 10 per cent sales growth is expected for the Woolworths food category. 

Full retail figures are to be released on Wednesday.