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'Brutal' Christmas season ahead for retailers

By unknown | Nov 30, 2007 | COMMENTS [ 0 ]

Adele Shevel

Adele Shevel

Retailers are headed for a tough Christmas season because retailer confidence is down, driven by expectations of slower sales growth over the festive season.

This is according to the findings of an yearly festive season retail sales survey conducted by Stellenbosch University's Bureau for Economic Research on behalf of the audit and business advisory firm Ernst & Young.

The retail and consumer products director at Ernst & Young, Derek Engelbrecht, said: "It seems like it's going to be a pretty brutal Christmas.

"While the volume of sales won't necessarily suffer we expect margins will be under pressure."

An economist at the Bureau for Economic Research, Hugo Pienaar, said the positive spin is these results indicate consumers are being affected by high interest rates, rather than failing to integrate them.

Confidence levels dropped 13 index points during the fourth quarter of 2007, though 71percent of respondents in the retail sector still rated business conditions as satisfactory.

"It's still a high level, but the trend it starting to change."

Pienaar said things are likely to get worse before they get better. But he expects that from 2009 the retail environment will re-accelerate, especially if the Reserve Bank cuts interest rates.


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