By Lehlohonolo Lehana.
Retail confidence edged down slightly in the first quarter of 2025, retreating from 54% to 50%, according to the latest retail survey by the Bureau for Economic Research (BER).
Despite the modest dip, confidence levels remain notably above the long-term average. “Half of the retailers surveyed by the BER were satisfied with prevailing business conditions, which likely bodes well for retail sales and consumer spending at the start of the year,” the BER’s press statement reads.
This sentiment follows the positive retail sales data from Stats SA, which showed a 5.4% year-on-year increase in the fourth quarter of 2024.
“Growth was broad-based, with semi-durable goods leading the way at 7.7% year-on-year, followed by non-durable goods at 6.5%,” the bureau added.
The BER suggests that this strong performance was supported by lower inflation, improved consumer confidence, and the impact of two-pot retirement withdrawals, which provided additional spending power.
Although retailer sentiment dipped slightly in the first quarter of 2025, the retail sales volume index remained steady on a seasonally adjusted basis.
At 8 index points, this measure is at its highest since the fourth quarter of 2014, indicating the potential for continued, albeit modest, year-on-year growth.
One of the standout positives in the BER report is the sharp improvement in the confidence of new vehicle dealers.
Confidence in this sector increased by 29 percentage points to 52%, driven by a marked surge in new vehicle sales volumes.
The BER attributes this boost to lower interest rates and the use of retirement withdrawals for vehicle deposits.
Naamsa data for January and February 2025 support this view, confirming the continuation of a sales rebound that began in October 2024.
This renewed optimism within the motor trade sector signals improving consumer health, according to the BER.
In contrast, the wholesale sector showed signs of strain.
After holding the position as the most confident sector for three consecutive quarters in the RMB/BER Business Confidence Index (BCI), optimism among wholesalers retreated in the first quarter of 2025.
Both consumer and non-consumer goods wholesalers reported a decline in confidence, accompanied by falling sales volumes and deteriorating business conditions.
The BER highlights concerns about US trade policy as a significant factor weighing on sentiment within this group.
Despite a record level of confidence among semi-durable goods retailers—the highest since before the global financial crisis—overall retail confidence was held back by declines in other categories.
“Confidence among non-durable goods and furniture retailers fell despite strong sales volumes,” said the BER.
The bureau noted that this discrepancy might stem from the sample’s skewed favour of smaller retailers, who face tougher conditions than larger grocery chains.