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Retailers warned, Tough times ahead for all businesses

| Economic factors

Retailers have been warned the next 18 months will be tough for all businesses. That is one of the key messages shared at Absa's consumer conference in Cape Town.

Analyst at Barclays Africa Rod Salmon says in previous years, spending has been largely on credit.

But he says there has been a slump in consumers signing up for debt.

“Credit has been prevented by two things, firstly the government put in place legislation which curbed credit and secondly, employment has been the biggest driver of credit and that has now come to a stop.”

Mass Market Researcher, Foshizi's Lebo Motshegoa says the informal sector provides great examples of how retailers can survive.

“They listen to their customer, they allow customisation to happen. If you are not showing flexibility in terms of the consumer, in terms of how they can interact with your retail yet you want them actually to spend their hard cash on you, then you’re living in a different world.”

Motshegoa focused on the changing trends among black consumers, highlighting the increasing number of blessers and willingness to buy no name brand as among the biggest drivers of changes in spending patterns.

He says the informal sector could hold the key to surviving in tough conditions.

“When I say informal, I’m not just talking about the spaza shops, I’m also talking about the scrap yard guy, the taxi industry and anyone who facilitates some form of a service to this market who happens to be informal. That’s where your learnings are.”

Consumer spending makes up 60% of South Africa's GDP, so if it stagnates so does growth.

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