’Tis the seasonto spend

2010-11-19 00:00

ALL the signs are that shoppers and retailers will enjoy a much better Christmas than last year, on the back of higher disposable incomes and a softer and more stable consumer inflation level.

Wage settlements in the public sector have come in significantly higher than expected, and pay increases awarded in the private sector have also reached healthy levels.

The interest rate cut announced yesterday will undoubtedly add impetus to a festive season.

FNB chief economist Dr Cees Bruggemans told The Witness that retailers can expect shoppers to spend much more than they did last year.

“It’s definitely going to be a better festive season than last year. We’re expecting good spending patterns, particularly in the light of sustained lower interest rates and better disposable income levels.”

Bruggemans believes consumers will not only splurge on lower-priced non-durable goods, but also spend more on durable goods such as furniture, appliances and even motor-vehicles.

“We are very much in the early part of the economic upswing. Disposable income has risen and interest rates are lower.

“The replacement cycle for buying new durable goods, such as cars and furniture to replace older goods, will kick in after some delays in this regard.

“They [consumers] can now normalise their replacement behaviour.

“This new cycle can run for quite a while,” Bruggemans said.

The executive director at Save Cash & Carry in Pietermaritzburg, Mohamed Noorgat, told The Witness that although November has been “unusually quiet”, the group is expecting a bumper Christmas.

Noorgat said a late December boom is expected, adding that the fast-moving consumer goods sector will perform particularly well.

“If the price is right, consumers will also buy durable goods.

“The durable goods sector is very competitive. Consumers are very price-sensitive in this space.

“But, there is disposable income out there. We’re expecting to be up on 2009 this Christmas.”

Pietermaritzburg’s big civil servant community recently received a healthy wage settlement and this has already impacted positively on the Dunranch Group, which owns five restaurants in Pietermaritzburg (including two John Dory’s restaurants, one Spur, Rockafellas and the White Horse function room).

Managing director Duncan Paul, told The Witness that the average consumer “has a lot more confidence this year”.

He said real spend per head has remained healthy.

“One of the restaurants had its record day — and it was during a mid-week, mid-month day.

“We can only attribute it to the government employees’ payday and the recent salary increase.

“The Pietermaritzburg growth last month in Spur was amazing, as was the growth at Rockafellas. Trading this year in general has been steady,” Paul said.

He added that demand has also picked up in the corporate sector.

“It’s definitely more buoyant. Bookings have been pouring in for year-end functions and Christmas functions, not only from big companies, but also from smaller companies with 10 to 15 guests.”

Retail sales statistics released this week for September showed that the sector recovered from a post-World Cup lull in August , recording year-on-year growth of 6,1%.

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