Retailers like Mr Price and Foschini have released strong trading updates in the past few months, and the uptick in clothing and footwear sales is evident from April's stronger-than-expected retail sales figure that fashioned a healthy growth print of 9.8% y/y.
"As expected, given the robust sales growth numbers coming out of some large local clothing retailers of late and the April retail liaison committee (RLC) data, the bulk of the improvement in headline sales growth stemmed from the clothing and footwear sub-category of sales, which jumped an impressive 16.9% y/y and alone contributed 3.3 percentage points to the headline growth print.
"Indications from the likes of Foschini that second-quarter sales growth has been 'strong and steady' and that credit sales are beginning to outstrip cash sales, leaves us relatively confident that demand in semi-durable components of consumption remain relatively well supported," said Jeffrey Schultz from Absa Capital.
According to Derek Engelbrecht, the retail and consumer products sector leader at Ernst & Young, South Africans can expect to see lower real wage increases, an increase in food and fuel prices and interest rate hikes during the second half of the year, as well as base effects.
"The growth in retail sales volumes will in all likelihood taper off further towards the end of the year," he said at a media briefing on Wednesday.
The survey found that retailers of durable goods like electronics, household appliances and furniture and those that sold non-durable goods like food, beverages and cosmetics saw the largest slowdown in volume growth.
"The anaemic pace of job creation, coupled with rising food and fuel prices, probably weighed on non-durable goods sales volumes during the second quarter," Engelbrecht added.
Hugo Pienaar, an economist at the BER, said retailers in the non-durable goods sector were especially under pressure.
"Their input costs are going up quite sharply. The volumes are not really there and they can't at this stage afford to pass on these higher costs to consumers, so they're absorbing quite a lot of this themselves and this is impacting their margins and weighing on profitability," he said.
Pick n Pay (PIK) CE Nick Badminton this month said that though the group's gross margins were recovering, it was seeing structural cost pressures, such as water and electricity and working capital, continuing to be tight.
Similarly, Famous Brands (Fbr), whose portfolio includes Steers, Wimpy and Debonairs Pizza, said last month that it expected trading conditions to remain difficult in the year ahead.
"Economic recovery will be muted and consumer spend will remain under pressure due to factors including electricity tariff hikes, increased fuel costs and the proposed toll road levies," CE Kevin Hedderwick said.
Engelbrecht said if retailers were able to increase their selling prices without further impeding volume growth, turnover could remain relatively sturdy.
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