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South Africa Retail Report Q1 2010
Business Monitor International, Jan 2010, Pages: 57
The South Africa Retail Report provides industry professionals and strategists, corporate analysts, retail associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on South Africa's retail industry.
BMI’s Q110 South Africa Retail Report forecasts that the country’s retail sales will grow from US$63.28bn in 2009 to US$101.52bn by 2014. Key factors behind this will be underlying economic growth, rising disposable income, falling unemployment, increasing urbanisation and the emergence of a black middle class.
South Africa’s nominal GDP was US$288.74bn in 2009, with last year’s decline of 1.8% expected to turn into growth of 2.2% in 2010 as the economy slowly begins to recover. Average annual GDP growth of 2.3% is predicted by BMI between 2009 and 2014. With the population increasing from 49.2mn in 2009 to an estimated 51.7mn by 2014, GDP per capita is forecast to rise by 55% by the end of the forecast period, reaching US$9,103. We believe consumer spending per capita will increase from US$4,260 in 2009 to US$6,133 by 2014.
Consumer spending is boosted by foreign visitors to South Africa. In 2008, according to Statistics South Africa (SSA), there were 9.5mn tourist arrivals – a 5.5% increase over the previous year. Spending by visitors rose more than 23%, to ZAR74.2bn (US$9.5bn). The FIFA World Cup in 2010 is set to reverse the slowdown of 2009.
In 2005, 64.1% of the South African population was described by the UN as economically active, with 37.7% in the 20-44 age range, which is important for retail sales. By 2015, 64.3% of the population is expected to be economically active, while the proportion of those in the 20-44 age band is forecast to reach 38%.
Growing urbanisation is also contributing to a vibrant retail sector, with a 26% increase in the number of urban households between 1994 and 2005. In 2005, less than 58% of the population was classified by the UN as urban and this is forecast to increase to more than 64% by 2015.
According to data from SSA, sales of textiles, clothing, footwear and leather goods amounted to US$11.64bn in 2008, or 18.9% of the total retail market. Home décor sales were US$4.31bn, representing a 7% market share, while furniture and appliance sales totalled US$3.88bn, or 6.3% of market share. Cosmetics and toiletries accounted for US$2.65bn of sales, giving them 4.3%.
Assuming these market shares stay as they are, BMI forecasts textile sales of US$19.19bn by 2014, with home decor worth US$7.11bn, furniture and appliances taking US$6.40bn, and cosmetics and toiletries accounting for US$4.37bn.
According to BMI data, retail sub-sectors that are predicted to show strong growth over the forecast period include consumer electronics, sales of which are expected to increase from US$6.24bn in 2009 to US$9.86bn by the end of the forecast period, a rise of more than 58%. Sales of over the counter (OTC) pharmaceutical products are predicted to increase by nearly 73%, from US$0.42bn in 2009 to US$0.72bn by 2014. Automotives sales are forecast to rise by 59%, from US$7.97bn in 2009 to US$12.67bn in 2014. Retail sales for our set of Middle East and Africa (MEA) countries in 2009 amounted to an estimated US$407.66bn, based on the varying national definitions. Total consumer spending for the region based on BMI’s macroeconomic database amounts to US$704.94bn. In 2009, the UAE, Saudi Arabia, Egypt and South Africa together accounted for an estimated 78.4% of regional retail sales, and their combined share is expected to rise to 81.3% by 2014. For South Africa, the estimated 2009 market share of 15.5% is expected to rise to 15.9% by 2014.
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