The driver of malls’ success turns the corner
07-06-2010
Some cause for optimism for shopping-centre landlords has been the recovery in retail sales volumes over the past few months.
In March 2010, the yearly growth in real retail sales turned the corner — from contraction to expansion — by growing by 1%; this after 13 consecutive months of contracting sales volumes.
Interestingly, a look at what has happened “behind” the growth-in-retail-sales graph reveals a few reasons for the improved performance. For one, consumer confidence has had a noticeable revival. In the first quarter of 2010, the FNB/BER Consumer Confidence Index increased to an index value of +15, up from +6 in the previous quarter. According to the compilers of the Index, the sharp improvement can be attributed to more respondents (on a net basis) expecting the economy and their own finances to improve during the next 12 months. In fact, in the reporting quarter, the economy grew at a better-than-expected rate of 4,6% (year-on-year and annualized).
A symptom of the improved retail sales performance — as seen in the corresponding graph — is the fact that the growth in the value of credit card purchases processed by banks has also passed through its nadir. The growth in the value of credit card purchases has been heading south since about 2006, triggered by rising interest rates and spurred on by the National Credit Act in 2007. Since the end of 2009, however, the growth in the value of credit card purchases has started to accelerate again, which can be seen as signalling the end of consumer deleveraging.
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