Marcia Klein

Marcia Klein

The spending power of middle and upper class consumers has plunged while the lower class consumers have more spending power, according to research by Cadiz.

The research, used in a financial results presentation by Woolworths chief executive Simon Susman, serves to emphasise just how much Woolies shoppers have been hit by economic conditions.

Susman is the first chief executive of a major retailer to say that the sector is in a recession - retail sales were declining in real terms and would continue to in the near term, he said.

Susman was releasing results yesterday at Woolworths' Hyde Park store, where staff were in full attendance. There was no evidence of a march by Woolworths staff who went through the streets of Johannesburg, demanding union recognition.

Sapa reported that the South African Commercial, Catering and Allied Workers' Union (Saccawu) said the protest action came "after a drawn out and currently unresolved organisational rights dispute".

Zyda Rylands, chief operating officer of support services at Woolworths, told Sapa that all stores were trading.

The food and clothing retailer reported lower earnings for the year to June as the downturn, which was particularly evident since December, took its toll. Since then, it has taken swift action, particularly in tightening costs.

Woolworths customers, who are largely middle to upper income earners, have been particularly hard hit by the increase in interest rates and inflation and Woolworths has lost market share.

Susman said bad debts deteriorated rapidly in the first half of the financial year but there were signs of stabilisation.