Local retailers face threat of closure

2008-09-26 00:00

MANY SA retailers are facing the threat of closure, as the waning fortunes of consumers finally begin to catch up with store owners.

Two key pieces of economic data released this week confirm the trend.

The total number of liquidations recorded in the retail, wholesale, catering and accommodation sector for the eight months to August 2008 surged by 11,7% compared with the first same period last year.

This sector accounts for about 14% of national GDP.

Retail trade sales in July 2008 slumped 4,6% year on year, with retailers of household furniture, appliances and equipment taking the biggest knock.

One Maritzburg business owner who has experienced this personally is Deon Harris of Digital Exposure.

He will close his photographic shop at Liberty Midlands Mall on Tuesday.

Harris told Weekend Witness that one of the reasons for the decision is that photographic businesses in SA have been under pressure with increased competition and the high cost associated with upgrading expensive equipment.

Standard Bank senior economist Dr Johan Botha said the trend in retail sales sets the scene for a recession in the sector.

“Retailers are not only suffering falling demand, but also rising input costs, which have consequently impacted on profitability in the sector.”

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