The November retail sales growth outcome of 8.2% y/y exceeded market expectations of 3.5% y/y. The sales growth was also an acceleration on the 3.5% y/y rise in October.
Much of the lift in November is likely to have been derived from consumers taking advantage of Black Friday deals. Black Friday sales were first introduced in November 2016.
In November, the highest growth rates of 20.8% y/y; 14.1% y/y and 12.4% y/y were recorded by all ‘other’retailers; household furniture and appliances retailers and textile and clothing retailers respectively.
However, based on weightings, the largest contributors to the 8.2% y/y increase in the headline figure were general dealers (2.6%), textile and clothing retailers (2.3%) and all ‘other’ retailers (2.2%).
All ‘other’ retailers have been recording double digit growth in each consecutive month since June 2017.The performance of this category includes the effects of increased online shopping at retailers without physical outlets, and trade in second-hand goods, with weight and sampling amendments implemented earlier this year likely also having an effect.
All ‘other’ retailers have also been the largest contributor to the lift in retail sales to 2.7% y/y in the January – November 2017 period from 1.9% y/y in the same period of 2016 (see figure 2).
Based on survey evidence, there is a risk of the stronger than expected outcome in November giving way to weaker than usual December sales growth. The results of the Q4.17 BER Retail Survey suggest the performance of the retail sector over the festive period was not expected to be particularly strong as confidence amongst retailers remained depressed and survey respondents noted that “conditions in the retail sector remain tough”. The net majority also expect business conditions to deteriorate in Q1.18.
Rand appreciation of around 10% since the ANC elective conference in December, is expected to feedthrough to CPI inflation in Q1.18 mainly via the petrol price component. Slower inflation will provide some relief to household finances. However, shopper appetite is still likely to remain curtailed by the weak labour market, relatively tight credit conditions applied to households and persistently depressed consumer confidence. We expect household consumption growth to remain relatively modest in 2018 at1.5% y/y compared to 1.3% in 2017.