CONSUMER spending is in the doldrums, yet clothing sales are still beating the pants off other retail categories. In the first quarter of this year household consumption growth — a key demand-side driver of the economy — withered to 1,8%, its slowest since the 2008 global financial crisis.
This doesn’t bode well for the second-quarter GDP figure, of which consumer spending accounts for around 60%. A heap of debt from store cards, microloans and unsecured credit has eroded disposable income, particularly of those in the lower-middle income band who are also battling rising inflation and utility costs. And though there’s scant respite on the horizon from lower interest rates, higher wages or easier credit, the propensity to buy clothes endures, …show more content…
"People understood Edgars for 60 years as the family apparel retailer with affordable, value-for-money products. Now what it’s doing is using the typical international model of adding global brands — the same as a Selfridges or a Harvey Nichols. Regarding Edgars’ own brands, the general view in the market is that it has allowed the quality to deteriorate in a quest to get margins right. Edgars is a mess, the numbers tell us its strategy is not working," says independent analyst Syd Vianello.
Shopping sprees aside, there certainly are pockets in the sector that show pain. Those in the mass middle market who have come to rely heavily on store credit are struggling to pay accounts, causing an escalation in bad debts at credit retailers Truworths and The Foschini Group. To manage their books through a tough credit cycle and prevent impairment rates going any higher, both retailers have made it tougher to get credit at their stores through stricter lending criteria. This has meant fewer consumers able to open new credit accounts, which has long been a key driver in both …show more content…
"Credit will still be a huge part of our business — we’ll be able to take all the advantages of an upward credit cycle, and in a tough credit cycle like we’re in now, if we’re going to have half of the business in cash, we’re going to be much more resilient," Murray adds.
Though there have been times when retailers have cut back on granting credit, the extent to which cash sales at Foschini have jumped, especially given the current straitened circumstances, is unprecedented.
Its full-year cash sales advanced 15,9% while credit purchases were up only 5,7%. Each month since January the group has grown cash sales in excess of 20%. Brands like Totalsports, @Home, Due South, Fabiani and G-Star, whose customers typically buy in cash, are growing faster than its more credit-orientated brands. As cash customers would have the choice to shop at any of its competitors, the group has also been dishing out its loyalty card aimed at attracting footfall through immediate rewards vouchers.
Vianello notes that if impairment rates don’t go any higher, Truworths and Foschini could come out on
This doesn’t bode well for the second-quarter GDP figure, of which consumer spending accounts for around 60%. A heap of debt from store cards, microloans and unsecured credit has eroded disposable income, particularly of those in the lower-middle income band who are also battling rising inflation and utility costs. And though there’s scant respite on the horizon from lower interest rates, higher wages or easier credit, the propensity to buy clothes endures, …show more content…
"People understood Edgars for 60 years as the family apparel retailer with affordable, value-for-money products. Now what it’s doing is using the typical international model of adding global brands — the same as a Selfridges or a Harvey Nichols. Regarding Edgars’ own brands, the general view in the market is that it has allowed the quality to deteriorate in a quest to get margins right. Edgars is a mess, the numbers tell us its strategy is not working," says independent analyst Syd Vianello.
Shopping sprees aside, there certainly are pockets in the sector that show pain. Those in the mass middle market who have come to rely heavily on store credit are struggling to pay accounts, causing an escalation in bad debts at credit retailers Truworths and The Foschini Group. To manage their books through a tough credit cycle and prevent impairment rates going any higher, both retailers have made it tougher to get credit at their stores through stricter lending criteria. This has meant fewer consumers able to open new credit accounts, which has long been a key driver in both …show more content…
"Credit will still be a huge part of our business — we’ll be able to take all the advantages of an upward credit cycle, and in a tough credit cycle like we’re in now, if we’re going to have half of the business in cash, we’re going to be much more resilient," Murray adds.
Though there have been times when retailers have cut back on granting credit, the extent to which cash sales at Foschini have jumped, especially given the current straitened circumstances, is unprecedented.
Its full-year cash sales advanced 15,9% while credit purchases were up only 5,7%. Each month since January the group has grown cash sales in excess of 20%. Brands like Totalsports, @Home, Due South, Fabiani and G-Star, whose customers typically buy in cash, are growing faster than its more credit-orientated brands. As cash customers would have the choice to shop at any of its competitors, the group has also been dishing out its loyalty card aimed at attracting footfall through immediate rewards vouchers.
Vianello notes that if impairment rates don’t go any higher, Truworths and Foschini could come out on