Several factors have recently culminated in a perfect storm of threats that South African retailers have to defend against, says Howard Barratt, principal consultant at Retail Directions,\u00a0a retail management platform with Cotton On as a principal client.<\/p>\n
War, extreme weather, power cuts, looting, and connectivity issues, are core issues facing the industry in South Africa currently, while belt-tightening by consumers amid soaring inflation is also a major concern.<\/p>\n
Annual consumer price inflation (CPI) reached 7.8% in July 2022, Statistics South Africa (Stats SA) said on Wednesday. This was a 1.5% increase from the 7.4% recorded in June 2022.<\/p>\n
The agency said the main contributors to the 7.8% annual inflation rate were food and non-alcoholic beverages; housing and utilities; transport; and miscellaneous goods and services.<\/p>\n
Food and non-alcoholic beverages increased by 9.7% year on year and contributed 1.7 percentage points to the total CPI annual rate of 7.8%.<\/p>\n
In July, the annual inflation rate for goods was 11.5%, up from 11.0% in June; and for services, it was 4.2%, up from 3.9% in June.<\/p>\n
“A recent spate of unexpected events \u2013 both local and global \u2013 have had a severely negative impact on the sector, serving as a reminder that retail businesses should be prioritising resilience and agility as key investment areas to mitigate risks and foster the ability to react and pivot when the unexpected happens,” said Barratt.<\/p>\n
The week-long July riots spread across the Gauteng and KwaZulu-Natal provinces and resulted in the damage and destruction of 1,800 stores across 200 malls, wiping R50 billion from the economy.<\/p>\n
The government\u2019s recent reintroduction of load shedding has not only brought about operational challenges but at Stage 6 \u2013 the most severe level of rolling blackouts yet \u2013 the prolonged and frequent power outages are estimated to cost the country\u2019s already ailing economy about R6 billion a week.<\/p>\n
Additionally, the war in Ukraine has resulted in soaring food and fuel prices \u2013 with local petrol and diesel prices shooting up by close to 40% in recent months.<\/p>\n