South African retailers face record low confidence as economy falters
South African retailers are sounding the alarm as business confidence crashes to its lowest level in a year, spelling trouble for an economy already teetering on the edge.
Image: FILE
South African retailers are raising urgent concerns as business confidence has dropped to its lowest level in a year, indicating serious challenges for an economy that is already struggling.
According to the latest Bureau for Economic Research (BER) Retail Survey, retailer confidence has fallen sharply from 42% to just 32% in the third quarter of 2025.
This 10-point decline is the first time in over a year that confidence has fallen below the long-term average of 40%, bringing sentiment back to the dismal levels seen at the start of 2024.
Retail accounts for nearly 20% of the country's gross domestic product, making it the fourth-largest contributor to the economy, according to a 2022 analysis.
Based on findings from Statistics South Africa's latest figures on economic growth, of 0.8% in the second quarter, economists are now putting full-year gains at anywhere between 0.9% and 1.2%.
This compares badly with National Treasury's expectations of 1.4% - and even that figure is nowhere near the 3% Operation Vulindlela 2.0 is aiming for this year.
Crucially, this sector employs an estimated 30,000 tax-registered businesses and engages nearly 20% of the economically active workforce, positioning it as the second-largest employer in South Africa after government, University of Johannesburg research shows.
Wholesalers, who had been riding high for five consecutive quarters declined dramatically with confidence tumbling from 50% to 38%, the BER survey found.
The pain is spreading fast. Survey results suggest volume growth in both retail and wholesale sectors likely moderated during the third quarter of 2025, pointing to a worrying slowdown in consumer demand, BER noted.
Statistics South Africa's retail sales data for July 2025, however, showed that retail trade sales jumped by 5.6% year-on-year, with hardware, paint and glass retailers leading the charge with a robust 13.2%.
Clothing and footwear retailers also gained strongly, with a solid 10% increase, while general dealers added 3.3%.
The BER survey indicates that furniture retailers and new vehicle dealers remain bright spots in an otherwise gloomy trade sector, suggesting some consumers - particularly higher-income earners - are still opening their wallets even as the broader market tightens its grip.
This retail retreat appears to coincide with what some economists believe is the end of the South African Reserve Bank's interest rate cutting cycle, which means that disposable income won't increase in amount before the festive season.
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