Retailers back up shipping lines’ predictions as orders are cut

Backing the shipping line executives who told FTW that the usual pre-Christmas peak import season had just not transpired this year are retailers – with press reports indicating that they have cut orders in expectation of not so merry Christmas sales. The comments are mostly aimed at what are termed discretionary goods – those that are not necessities – and goods at the luxury end of the spectrum. The big fear, according to Business Report commentators, was the possibility of overstocking – when bleak Christmas sales might force retailers into “debilitating discounts” to try to escape stock overhangs in the New Year, which would negatively impact on gross margins. Many highincome earners may fail to earn performance bonuses this year and their shareholdings are likely to have plunged – particularly as this global financial crisis is not easing. This could see spending on luxury items falling dramatically. Middle-income earners are still expected to get their 13th cheques – but cutting debt may supersede the traditional big-ticket gifts this December. High inflation and interest rates are also likely to have an on-going debilitating effect. Forecasting this bleak Christmas is the retail industry already facing a growing sales decline. According to Statistics SA, last December’s sales fell 0.5% and the decline has deepened – with August sales already 5.5% down.