Aids's impact on retail

Posted On Wednesday, 29 August 2001 03:01 Published by
Rate this item
(0 votes)
Officially, HIV/Aids will account for 7,3 million deaths by 2015. Add to this a steady decline in the African population birth-rate and your sobering picture of South Africa's future retail prospects is complete.

Officially, HIV/Aids will account for 7,3 million deaths by 2015. Add to this a steady decline in the African population birth-rate and your sobering picture of South Africa's future retail prospects is complete. The only mystery remaining is what measures retailers will take to counter the effect of their shrinking client base.Financial journalist Gerrit Boonstra writes in Sanlam's Money Matters that of SA's 26,9 million people between the ages of 15 and 65, 15,8 million are economically active. One could argue, he says, the estimated number of 7,3 million deaths could be replaced by the 5,5 million unemployed.

The problem is that the decline in population numbers is equalled by a similar decline in wealth. And thus spending power.

Aids is also changing the way many South Africans spend their money. 'Presently the average SA household spends 0,5% of its income on funeral costs. Considering the negative influence the weekly expenditure of R2,50 on a Lotto ticket has on the retail industry, one can imagine what the much higher expenditure on medicine and funerals will have on food and clothing,' Boonstra writes.

The ageing population will further change spending patterns. Research shows that the percentage of the population older than 65 years is estimated to increase to 8,3% by 2031 and those under 14 years to decline to 20,0% in 2031.

Retailers are likely to be forced into restructuring their businesses and expanding into new markets because their customer base is dying.

A recent Sunday Times article by Bobby Jordan suggests that retailers targeting lower-income and emerging market consumers are most at risk. Some retailers, like the JD Group, are already taking action by shifting business away from areas of high HIV-Aids prevalence. Which means the loss of some 5% of its store-base.

The Group's research shows that Pick 'n Pay and Shoprite Checkers will be worst hit, while Metropolitan Life's Aids research unit predicts that the Northern Province and KwaZulu-Natal will be worst off.


Publisher: Rode
Source: Rode

Most Popular

Five things you need to know about the repo rate

Jan 28, 2021
Carl_Coetzee_BetterBond_CEO
The South African Reserve Bank has just announced that it is holding the repo rate…

SA REIT Association - Chairman's message and 2021 sector outlook

Feb 02, 2021
Estienne de Klerk_Chairman of SAREIT
Real estate has long been a rewarding sector of the financial markets. Like all sectors,…

It’s cheaper to buy than to rent a home in 2021

Feb 08, 2021
Carl_Coetzee_BetterBond_CEO
If the past year has taught us anything, it is how important our homes have become to us.

Thavhani City set for more growth in 2021 as its Motor City and medical developments accelerate

Feb 15, 2021
Thavhani_City_Locality_Layout
Thavhani City mixed-use urban precinct in Thohoyandou, designed to be the future economic…

Brand new residential development in La Lucia 60% sold through Pam Golding Properties

Feb 15, 2021
Kent_Exterior
Such is the consistent high demand for centrally located, well-priced residential…

Please publish modules in offcanvas position.