South African retail sector faces its tipping point

Stefan Salzer, partner and MD at the Boston Consulting Group, said South Africa’s retail sector remains gloomy, as the retailers try to recover from weak and declining GDP growth, consumer psychology and the economic fundamentals underpinning consumer demand.

All things considered, South Africa’s retailers performed robustly last year, despite the country’s weak growth environment. Over the past six years, the retail sector had a good run, outperforming economic growth. However, analysts don’t expect this trend to continue this year.

According to Ernst and Young’s analysis of the 12 largest retailers in the country, which account for nearly R600 billion in annual sales, last year grocery retailers had a 62% share of total retail spend, specialty retailers had 23% and clothing retailers achieved 15%.