By: Kirsty Laschinger

IT'S SAID THAT it's not over 'til the fat lady sings. However, analysts and investors are increasingly asking whether the consumer boom is over. Statistics SA's recent release of July retail sales showed a significant slowing in the overall real growth rate to 3,2%. That - of more concern - came in well below analysts' expectations of 6%.

But Keith Brouze, CEO of Busby, says that the figures don't accurately reflect the reality on the ground. He says that accessory sales, which are a strong indicator of how large retailers are faring, are growing at just slightly lower rates than last year. Recent updates of Foschini and Truworths' results show that the industry is still growing well.

There's anecdotal evidence to support Brouze's view. Liberty Properties' Melville Urdang says that property companies measure retail performance in two ways: from the turnovers presented and the demand for retail space. Tellingly, demand from the major retail groups for increased space remains firm, for both new stores as well as increased footprint in existing stores.

Urdang says that demand remains broad-based and he believes it unlikely that all retailers would continue to expand if they believed growth was about to implode.

Urdang adds that one key driver for the demand for new space in suburban shopping centres by SA's major retail outlets has been the densification of housing. New stores are needed to service far larger populations in specific geographic areas than was the case in the past.

However, Nedbank Securities retail analyst Syd Vianello says that consumer spending faces a number of strong headwinds as we move towards next year. The first and most obvious is the possibility that rising interest rates will eat into the disposable income of SA's average consumer and reduce his/her spending power.

But there are other threats, such as tax changes and higher medical costs. Vianello says that the new tax regime, which will tax company car benefits, will be detrimental to the upper and middle classes.

Medical cost inflation will also rise, as manufacturers now have a window to increase prices following the introduction of medicine pricing regulations last year.

But there's a school of thought that suggests that Government's revenue overrun this year will be so large that we could expect a massive cut in basic taxes next year - which may offset all of the above.