Cape Town - By far the biggest impact announced in Budget 2017 is the fuel levy, which has a huge knock on effect, according to Karl Westvig, CEO of Retail Capital, a company providing working capital to businesses.
“It represents a double whammy for the retail and small business sector, as it results in cost inflation for the business owner and takes money out of the pockets of customers of that business,” said Westvig.
“We saw in our December statistics that retail sales are at their lowest level in the last six or seven years. Over 40% of the population has a negative credit record, indicating they are not meeting their monthly payments.”
Westvig said since the introduction of the new credit regulations he has seen credit sales fall below those of cash sales. Furniture and clothing retailers, to some extent, have been affected and many are already in weakened positions.
With slow gross domestic product (GDP) growth of only 1.3%, the overall retail sector will remain under pressure, with spend shifting around but the pie will not be growing.