Muted merry Christmas for consumers

2011-12-03 16:45

Cash-strapped consumers are in for another bleak Christmas season as job uncertainty and staggeringly high food and fuel prices weigh heavily on their festive spending.

While retailers are expecting another lukewarm Christmas with a predicted 7% increase in their sales compared to 2010, the National Consumer Forum (NCF) says consumers are still insecure about their economic ­future.

The latest Bureau of Economic Research and Ernst & Young Festive Season Retail Trends survey showed the majority of retailers interviewed had experienced higher sales volumes over the period leading up to Christmas compared with the same period last year.

NCF chairman Thami Bolani agreed that it would be difficult to have the kind of Christmas we used to have in the past.

“Especially the lower and ­middle income households are still highly indebted. People will not be able to afford the things that make the festive season great.”

Bolani said many of these consumers are not concerned about what is happening in economies in Europe or elsewhere, because what they are seeing at home is worrying enough.

“Their jobs are not safe and fuel and food prices keep on rising. Those living in Gauteng will have to fork our more when e-tolling on the highways start in the new year. All this makes them worry about their finances over the next two years,” Bolani said.

The last financial quarter of this year, however, has shown some spending improvement which retailers hope will carry through to the festive season.

Exclusive Books strategist Batya Green-Bricker said the book chain is “cautiously optimistic” about Christmas sales.

Hugo Pienaar, senior economist at the Bureau of Economic Research, says the economic growth experienced before the 2008 recession was exceptional.

“The marginal predictions for this festive season of a retail sales growth of 7% shows a strong ­performance,” Pienaar said.

The economy also created 193 000 jobs in the third quarter of this year and salaried consumers got good salary increases.

“People have more disposable income,” Pienaar said.

Retailers in semi-durable goods such as clothing, shoes, toys and CDs are expecting sales increases of 35%. With non-durable goods like food and beverages, they expect a sales increase of 19%, the survey found.

Tshepo Marumule, marketing manager at the Consumer Goods Council of South Africa, said while the council is optimistic about festive season spending, it was still cautioning consumers to spend responsibly.

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