Retail sales for July hit record low, unrest impacts all of SA
The riots and looting that took place in July wreaked havoc in KwaZulu-Natal and parts of Gauteng.
The latest figures from Statistics SA reflect that the huge drop in July sales was more widespread than only those two provinces.
Retail trade sales in South Africa decreased 0,8% year on year in July 2021.
On a month on month basis, seasonally adjusted sales plummeted by 11.2% compared to June.
Stats SA says this is the biggest monthly drop in sales since April 2020, when the country was placed under Level 5 lockdown.
Bruce Whitfield finds out why the decline in July retail sales matters so much from Evan Walker, Portfolio Manager at 36ONE Asset Management.
Walker says it has huge ramifications for the country.
Not only was July a terrible month for retail, but it serves as a confidence indicator going forward.
It's got widespread implications - there are a lot of people reliant on their jobs first of all, then we've got supply chains up and down... a retail industry very reliant on a growing domestic economy...Evan Walker, Portfolio Manager - 36ONE Asset Management
It's a huge component of South African GDP and it's obviously not only the actual sales for the month but it's a confidence indicator for the year going forward.Evan Walker, Portfolio Manager - 36ONE Asset Management
Worries about security kept many people at home, Walker notes.
Then there are indications that up to 50,000 businesses have been badly affected and some might not return, which will exacerbate already high unemployment.
I think everyone just sat in shock as this unfolded... you didn't want to venture out at all.... and post-that I think people have just sat there and wondered about their security in South Africa and hung on to their savings dearly.Evan Walker, Portfolio Manager - 36ONE Asset Management
It really has hit South Africa hard... The economy is already struggling with the amount of lockdowns we've had and the unemployment rate which is out of control... This is going to create another 150,000 to 200,000 additional unemployed people.Evan Walker, Portfolio Manager - 36ONE Asset Management
Walker agrees that the current uncertainty will cause some consumers to delay big-ticket purchases.
The bigger effect he says, is that the country's retailers will have to recoup the cost of their losses somehow and this will ultimately be borne by the consumer.
Just in the medium-term retailers are going to have to substantially enhance a number of their protocols... all the way through from IT to security, to additional infrastructure... those plans are going to cost money...Evan Walker, Portfolio Manager - 36ONE Asset Management
Listen to Walker discuss the current situation and the outlook for job creation in South Africa:
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