Retail in the doldrums

Posted On Friday, 30 March 2001 03:01 Published by
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The after-season half-price sales signs are up and retailers are still anxiously awaiting the rush of buyers – all conspicuously absent in the current retail slump. It is common knowledge that retailers are under pressure.

The after-season half-price sales signs are up and retailers are still anxiously awaiting the rush of buyers – all conspicuously absent in the current retail slump. It is common knowledge that retailers are under pressure. The question is why, and when the situation will change for the better.
Rode CEO Erwin Rode says one of the primary reasons is that retail inflation remains close to zero through illegal imports and legal global competition. This means that retailers find it progressively more difficult to pass increases on to consumers, which puts their margins under severe pressure.

Rode is even more concerned about the effect of Aids on consumer spending, buying and earning power. “Not only does Aids reduce incomes through absenteeism, but there are additional expenses like funerals and medical bills.” He says the epidemic is therefore tragically underrated in terms of its impact on the economy. Retail will feel the crunch, especially in nodes where black buyers predominate.

Also of concern is the oversupply of shopping space in many areas of the country, which reduces trading densities. “And to add insult to injury, increasingly longer trading hours are putting further pressure on costs.

“There are only so many people who can afford to shop, but shops have to stay open to accommodate the dwindling number of shoppers. And staff have to be paid hefty after-hour payments prescribed by our crazy labour laws,” Rode says.

Because none of these factors is going to change significantly in the medium term, Rode doesn’t expect the prospects for retailers to improve. Over the past thirty years, shopping centres have been the property investments of note, but whether this is going to be the case in the next ten years, remains to be seen.

The bright side, Rode says, is that the economy is growing at 3 percent. The purchasing power of the population at large will probably reflect this, thereby restoring equilibrium in demand for and supply of retail space.


Publisher: Rode
Source: Rode

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