Newsletter No 5/16 February 2024

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Retail sales in December deliver welcome surprise

By Thuletho Zwane

But index shows consumer confidence during the festive season was the worst in more than two decades

Stats SA reports that retail trade grew 2.7% from a year earlier in December. Picture: 123RF

SA retail sales surprised in December, growing faster than market expectations and further strengthening the case against a technical recession. But economists warn the sector is still expected to detract from overall GDP in the fourth quarter due to muted consumer spending.

While retail sales numbers published by Stats SA on Wednesday were positive, growing 2.7% from a year earlier in December after an upwardly revised 1% decrease in the prior month and better-than-market forecasts of a 0.7% fall, the outcome follows two consecutive months of declines.

While retail volumes rose 1.4% in December month on month, the most since January 2022 — after an upwardly revised 1.1% increase in the previous month — trade sales contracted in the three months to end-December.

Sales contracted 0.4% quarter on quarter in the fourth quarter, dragged lower by a 1.5% drop in textiles, clothing, footwear and leather goods — implying that the retail industry will detract from GDP growth in the fourth quarter.

“The latest numbers align with the trend of choppy economic data we have seen throughout 2023, indicative of an economy simply lurching along,” Oxford Economics senior economist Jee-A van der Linde said.

Investec economist Lara Hodes said that despite December’s positive result, overall consumers remained largely constrained, grappling with lacklustre real incomes.

“Average real take-home pay declined 4.7% year on year in 2023 … and persistent economic challenges have hampered companies’ ability to pay inflation-related salary increases over the past 18-24 months,” Hodes said.

A closer look at the data shows three out of seven categories recorded an expansion in annual volumes.

The clothing and footwear category rebounded to 7% year on year, contributing 1.6 percentage points to the headline number. It was supported by the general dealers category, which saw volumes increase 3.5% year on year, contributing 1.5 percentage points, while the household furniture sales category recorded a 3.2% increase, contributing 0.1 of a percentage point.

What dragged volumes in December were the hardware material category and the other retailers category, recording declines of 2.8% year on year and 2.4%, respectively, and each detracting 0.2 percentage points.

The pharmaceuticals category declined by 1.9% year on year, detracting 0.1 percentage point from the headline number.

FNB senior economist Siphamandla Mkhwanazi said shopping activity declined 1% in 2023 compared with 2022, reflecting a subdued consumer demand environment.

“We expect this to persist in the near term, driven by sticky inflation, high interest rates and depressed consumer confidence,” Mkhwanazi said. “Furthermore, the prevailing tight lending standards and high debt service cost environment should keep credit growth relatively contained, both in the bank and nonbank sectors, and thus provide less support to consumption. That said, the medium- to longer-term outlook is slightly brighter.”

SA household consumption has been on a downward trajectory, falling in the second and third quarters of 2023 as a result of the cumulative rise in interest rates. The Reserve Bank increased rates by 475 basis points between November 2021 and May 2023, taking its benchmark repo rate to 8.25%.

Headline inflation continued on its downward trajectory in December because of a sharp moderation in food and fuel inflation. It reached its lowest reading in four months at 5.1% in December — from 5.5% in November — but is still well above the Bank’s preferred 4.5%.

Inflation averaged 6% in 2023, above the Bank’s forecast of 5.8%.

Consumers and retailers also faced weak finances, subdued credit growth, low disposable incomes and fragile confidence.

Wholesale sales collapsed in October, reflecting lower consumer spending, while new vehicle sales contracted for the fifth consecutive month in December.

The consumer confidence index, a measure of how optimistic or pessimistic consumers are about the future economic situation and their own financial prospects, slipped to minus 17 index points in the fourth quarter, a survey by the Bureau for Economic Research (BER) in partnership with FNB showed on Thursday.

This is the lowest festive season consumer confidence reading in more than two decades.

The Wednesday reading puts the country’s state of consumer spending in focus. Consumption spending accounts for about 60% of GDP.

Hodes said Investec expected consumption expenditure, which makes up a significant two-thirds of growth projected, to be a moderate 1.6% year on year in 2024, with expected interest rate cuts providing some relief to the indebted.

Van der Linde said Oxford Economics expected that SA’s economy would avoid a recession in the fourth quarter, with real GDP forecast to grow 0.1% quarter on quarter, after quarterly manufacturing production hardly increased in the quarter. Mining output rising above expectations.

“We forecast real GDP growth to pick up only modestly to reach 0.7% this year,” he said. “Supply-side constraints will continue to undermine growth in the first half of the year amid ongoing load-shedding and port congestion, with the peak affect of tighter monetary policy also likely to still constrain household spending during the first half of 2024.”

He expected the Bank to start cutting rates in the third quarter of 2023, with the repo rate at 7.75% by the end of the year.   

We need a reset and luxury designers know it

By Sandsio Ngubane

Image: Janko Ferlič/Unsplash

The 2024 news cycle has got off to what I can only refer to as a crazy start. Take comedian Katt Williams and his tales about the dark side of Hollywood; Jacob Zuma’s return (or not?) to active politics; and SA’s International Court of Justice case against Israel … there’s no doubt it’s going to be one helluva chaotic election year.

Yes, there’s also that. Elections. Almost half of the world’s population — including we South Africans — goes to the polls this year in what pundits are calling a watershed for democracy as the world veers towards extreme polarisation, perhaps best illustrated by events unfolding in the Middle East. One thing is certain: tectonic shifts are under way as the world’s moral centre appears to be crumbling.

But what does any of that have to do with the way we dress? Well, to understand where we are, perhaps it would help to look at what’s happening with consumer trends in general.

Global marketing intelligence agency Mintel’s analysts predicts major social shifts this year. They’ve identified five trends: the increasing importance of human relationships in a world dominated by algorithms; consumers reassessing what matters most to them and their perception of what constitutes value; an emphasis on mental health; what they call a “new green reality” as the effects of climate change become ever more apparent; and brands working with consumers to find “new ways to deal with uncertainty”.

Relationships, value, mental health, uncertainty. There’s an undertone of going back to basics, and innovating from there. In real life, it might mean finding joy in the simple things. That requires conscious consumption, if not for the benefit of the planet, then at least for you pocket. In Cyril’s economy, as with other times of uncertainty, it can’t be business as usual.

Value takes centre stage and in fashion, value doesn’t come cheap. Less becomes more, if you will, and Mintel’s predictions reflect that. So, too, do the runways of the most influential fashion platforms, like the recent Paris Men’s Wear shows where it became apparent that the way too eager internet wrote quiet luxury’s obituary far too early.

Muted tones and streamlined silhouettes; clothing you can wear again and again in many different ways, made a splash. There’s a desire to take the fuss out of getting dressed.

Designers seem to be leaning in on the idea of timeless luxury with earthy tones, leather, big investments coats, sharp and soft tailoring. To me, this signals a conscious approach to dressing up but it also signals a need to invest in longevity over novelty. In the words of Louis Vuitton’s Pharell Williams: “If you’re going to spend your disposable income at a time like this, it has to be for something that’s going to last.” That definitely isn’t a shirt with trendy logos. Nor is it a trendy celebrity collab. It’s something whose value won’t diminish once the excitement has faded.

At Gucci, Sabato De Sarno rooted his collection in real life, offering a beautifully modern spin on men’s wear classics with refined, clean, sleek and slim tailoring. This marks a U-turn from the eclecticism of Gucci’s most recent Alessandro Michele era.

Jet-black suiting, herringbone and English check fabrics as well as traditional argyle patterns in new, off-kilter shapes signalled a “dandy chic” at Hermes. The brand led with understated luxury — long leather coats and splendid knitwear — and a similarly subtle elegance permeated Dior’s presentation.

At Balmain, designer Olivier Rousteing proclaimed that “luxury has a new meaning, and it screams luxury”, cranking up the maximalism with vivid style codes celebrating retro elegance. It was the antithesis of quiet luxury, with bold colours, prints and embellishments, but nonetheless a return to what high fashion has always been about: glamour.

Many of the collections currently coming out of the runways are an antithesis of sports luxe that’s had a stranglehold on fashion in recent times. It’s simple, straightforward luxury that can be worn every day and it looks good!

It’s no wonder we are also seeing a huge presence of the cargo trend. Whether it’s about workwear with a twist, or evening wear in all its chic glory, fashion seems to be going utilitarian and it’s probably the reset we need.

I, for one, will be cleaning up my closet in favour of items that hold value in terms of quality, practicality and maximum wearability.

Fiberpartner ApS and Stein Fibers, LLC Announce Strategic Cooperation for Distribution of Innovative Less Harmfull Fibers

Fiberpartner ApS, a leading global supplier of responsible and innovative fiber solutions, is entering a strategic partnership with Stein Fibers, LLC, a renowned distributor of special fibers and materials. This partnership is designed to make new and innovative fiber solutions widely available and accessible, contributing to a more responsible future. The goal is to support the transition towards a non-petroleum-based development of fibers and work towards an environmentally friendly tomorrow.

Fiberpartner ApS and Stein Fibers, LLC have entered this partnership to ensure a more widespread distribution of the innovative fiber solutions across various industries in the USA. This collaboration will provide manufacturers and brands with easier access to responsible fiber solutions, enabling them to meet their sustainability goals and reduce their environmental impact.

The collaboration offers several advantages, such as:

Enhanched Availability: We’re increasing availability for fiber solutions, providing customers with easier access to these responsible materials for seamless integration into their products – this is gained through Stein Fibers’ leading distribution network across the USA.

Sustainable collaboration: Fiberpartner ApS and Stein Fibers, LLC share a commitment to driving innovation in sustainability. Through this partnership, their collective efforts will be strengthened, promoting the delivery of environmentally friendly solutions to the market.

Expertise and Assistance: Customers will gain valuable insights and support from both companies, guaranteeing a seamless transition to these more sustainable fiber alternatives.

“We are excited about our partnership with Stein Fibers, LLC,” says Thomas Wittrup, CEO of Fiberpartner ApS. “Together, we are better equipped to meet the growing demand for better and less harmful fiber solutions. We are committed to making our solutions more readily available to businesses worldwide. Stein Fibers is a market leader in the distribution of textile fibers for the fiberfill, nonwovens, and spinning industries. Together we can provide our global customers world class supply chain solutions.”

“We are pleased about this collaboration with Fiberpartner ApS in promoting our supply chain solutions in conjunction with their innovative fiber solutions,” says Jaren Edwards, President at Stein Fibers, LLC. “This partnership aligns perfectly with our mission to provide cutting-edge fiber materials with a lower footprint to our customers. We believe that these innovative fibers will play a vital role in reducing the environmental impact of the industries we serve.”

Please direct any questions to:

Thomas Wittrup, CEO, Fiberpartner ApS, Denmark, tel. +45 2025 6509, twt@fiberpartner.com

Jaren Edwards, President, Stein Fibers, LLC, USA, tel. +1 980 859 4746, jaren@steinfibers.com

Fiberpartner ApS in brief:

Fiberpartner ApS is a leading global supplier of responsible and innovative fiber solutions. With a commitment to driving sustainable development, Fiberpartner ApS offers a wide range of high-quality fibers for various industries, including textiles, automotive, and home textiles. For more information, please visit www.fiberpartner.com

Stein Fibers, LLC in brief:

Stein Fibers, LLC is a renowned distributor of specialty fibers and materials, serving a wide range of industries such as home textiles, automotive, and industrial applications. With a focus on innovation and responsibility, Stein Fibers, LLC provides customers with cutting-edge solutions to meet their specific needs. For more information, please visit www.steinfibers.com

Cape Town’s CBD gains exciting new monthly creative event with the launch of Kuier@TheCastle.

The Craft + Design Institute (CDI), in partnership with the Castle of Good Hope, will launch a new monthly market on 24 February 2024, featuring a diverse array of Cape Town’s creative talent at one of the country’s eminent cultural tourism attractions.

“Kuier@TheCastle” offers a multifaceted experience with various local artisanal products, culinary delights and entertainment designed to cater to all the senses and provide a memorable day out for the whole family. The two institutions envision this becoming the biggest monthly creative event in the central business district.

“We are inviting people to come and experience the magic within the Castle,” says Erica Elk, Group CEO of the Craft + Design Institute. “Come and ‘Kuier’ with us in this magnificent space – one of the oldest in South Africa – to chill, shop, eat, play and explore the fantastic local delights at this extraordinary heritage site we are so lucky to have such easy access to.”

“We chose the name ‘Kuier’ because it is such a colourful local expression that speaks to people coming together to relax together, break bread together, embodying the spirit of communal gathering and shared experiences,” she says.

“This aligns seamlessly with the overarching sentiment of what we want to provide with Kuier@TheCastle – a space and opportunity for diverse people to connect, engage, and celebrate the extraordinary talents of local artisans alongside great music and food.”

“We forget that we are only 18 months or so out of the pandemic and are still rebuilding our lives in physical and shared spaces. Many markets and events closed, and thousands of creative practitioners have had their lives shattered over that devastating period; we need to reconnect and rebuild in purposeful ways; and do it better than before.”

Calvyn Gilfellan, CEO of the Castle, is very excited about the partnership and the launch of the new initiative when we celebrate 30 years of democracy. Says Gilfellan: “Our mission at the Castle is to create an accessible space where all are welcome, can learn and understand our history and heritage, and can participate in building our shared future in the spirit of Ubuntu.”

“The Kuier@TheCastle market with the CDI has the potential to be a beautiful platform to bring Capetonians and tourists from all walks of life together, to relax on the green grass and drink in the most spectacular views of Table Mountain and the City … and spread the love by supporting local creative artisans and performers.”

Here’s what locals and tourists alike can look forward to:

A diverse range of products, food and entertainment: The event market will feature a diverse range of products, including jewellery, ceramics, textiles, woodwork, and fine art, accompanied by local performers and a feast of food options. With networks stretching far and wide, the CDI is sourcing new products and vendors to delight visitors.

Historic setting: Set within the Castle of Good Hope, with Table Mountain as the backdrop, Kuier@TheCastle offers a unique and picturesque venue for locals and tourists to explore the Castle’s six museums, historically significant sites, and more on their own or through guided tours.

Live demonstrations: Gain insight into the creative process as artisans conduct live demonstrations and workshops, allowing visitors to explore the skill that goes into crafting unique pieces.

A dynamic array of pop-ups: The event will be a lively space for smaller niche pop-ups to trade monthly, adding to the ethos of inclusivity and a multi-faceted visitor experience.

Community spirit and family: Chill and shade areas set up for Kuier@TheCastle will create inviting spaces for individuals and families to come together in the spirit of “Ubuntu” – fostering a sense of community and connection while supporting local talent and contributing to the growth of the creative economy.

Elk says the new market is an essential new offering as part of the CDI’s mission to help SMMEs and artists grow.

“The Mother City thrives as a dynamic hub for creative practitioners, artisans and designers who infuse their unique talents into the very fabric of the city – it’s what makes Cape Town a major global centre of design and creativity.”

She adds that the East City precinct of the CBD offers visitors an excellent opportunity to explore the oldest parts of the city, which is also a cultural and creative hub.

“The East City part of the CBD has a host of museums such as the District Six Museum and Desmond and Leah Tutu Foundation, galleries, design stores and new cafes and restaurants starting up. A short wander down Buitenkant and Harrington streets allows visitors to explore and discover. The East City is an emerging canvas for artists, designers, and other creatives to showcase their talents and contribute to the city’s creative identity.”

Gilfellan adds that the Castle saw a 24% increase in visitor numbers year-on-year. In 2023, 82 889 visitors were recorded, and festivals and events are a significant contributor to this growth in the local tourism economy.

To increase affordability, the Castle offers a significant discount on its entrance fee on each Kuier@TheCastle market day, with adult entry tickets at R30 and children at R15.

Kuier@TheCastle will be open from 9 am – 4 pm on 24 February 2023 and will run on the last Saturday of each month in future. Visitors will have access to safe parking inside the Castle via the Darling Street entrance.

About the Craft + Design Institute:

The Craft + Design Institute is a non-profit organisation with over 22 years of success in developing creative SMMEs, artisans, and the craft and design sector in South Africa. Through various initiatives and events, the institute seeks to support local artisans, foster innovation, and contribute to the growth of a sustainable and thriving creative economy.

Rex True – preference share dividend

A cash dividend on the 6% cumulative preference shares (“preference shares”) for the six months ending 31 December 2023 at the rate of 6% per annum (6.00 cents per preference share) has been declared and will be paid on Monday, 4 March 2024.

Dorset buttons is a style of craft made buttons originating in the English county of Dorset.Their manufacture was at a peak between 1622-1850, after were overtaken by machine made buttons. Buttons were made by outworkers from their homes as piece work. A good buttoner could make around 6 dozen. This had the advantage of being a home based activity. A button was formed by using white linen covering a metal ring and decorated by evenly spaced white thread.

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