Big surprise for retailers in South Africa – but consumers still feel the pain

 ·14 Feb 2024

The retail industry in South Africa exceeded expectations for the tail end of 2023 – but low consumer demand continues to plague the sector.

The latest data from StatsSA showed that retail trade sales in South Africa increased by 2.7% year-on-year (y/y) in December 2023 – a stronger result than analysts’ projections of a 0.7% decline.

The largest contributors to this increase were:

  • Retailers in textiles, clothing, footwear and leather goods (7.0% and contributing 1.6 percentage points);
  • General dealers (3.5% and contributing 1.5 percentage points).
Source: StatsSA

On a month-on-month basis, volumes increased by 1.4%. BankservAfrica said that robust “sales were reflected over the traditionally busy December shopping season.”

Investec economist Lara Hodes said that card spending increased to almost double its value at R50 billion, with 47 million card transactions in December 2023. This is compared to R26 billion spent in the same period in 2022.

Additionally, volumes saw a year-on-year increase of 6% from the 45 million transactions in December 2022. These figures suggest that the average spend per purchase has risen from R580 to R1,048.

Source: StatsSA

However, quarterly adjusted retail trade sales decreased by 0.4% compared with the third quarter of 2023, with FNB senior economist Siphamandla Mkhwanazi saying that this implies “that the retail industry will detract from the 4Q23 GDP growth.”

Retail trade sales increased by a flat 0.1% in the fourth quarter of 2023 compared with the fourth quarter of 2022. 

“The muted shopping activity in 4Q23 is consistent with sentiment indicators in consumer-facing sectors, which predicted weakening demand into the 2023 festive season,” said Mkhwanazi.

Overall, retail trade sales decreased by 1.0% in 2023 compared with 2022, “reflecting a subdued consumer demand environment,” said Mkhwanazi.

“We expect this to persist in the near term, driven by sticky inflation, high interest rates and depressed consumer confidence,” he added.

As such, six of the seven types of retailers showed negative year-on-year growth rates over this period. The largest negative contributor to the year’s retail trade sales was general dealers (-2.4% and contributing -1.0 percentage point).

Conversely, the only positive contributor was retailers in textiles, clothing, footwear and leather goods (5.7% and contributing 1.0 percentage point).


Hodes, said that despite December’s result, overall consumers remain largely constrained as they grapple with lacklustre real incomes.

“Average real take-home pay declined by 4.7% y/y in 2023… persistent “economic challenges have hampered companies’ ability to pay inflation-related salary increases over the past 18-24 months,” said Hodes.

Mkhwanazi sees the short-to-longer term outlook as brighter, as different measures that have been put in place “should help support spending on discretionary items [which] should see household consumption expenditure lift from the estimated 0.8% y/y in 2023, to around 1.5% in 2024.”

Read: Mining production rises slightly, but remains below expectations

Show comments
Subscribe to our daily newsletter