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Send  Share  RSS  Twitter  10 Jul 2012

FINANCE: Renewed Consumer Confidence in W Cape


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Latest statistics released by Cape Town-based Spark ATM Systems, South Africa’s premier independent ATM deployer, reveal a year-on-year growth of 6.77% in cash withdrawal activity for June - the largest year-on-year growth for 2012 to date - suggesting improved consumer spending and retail trading conditions nationally.  

The Spark Cash Index (SCI), which measures the average value of cash withdrawals across more than 1 500 Spark ATMs throughout the country, also revealed a month-on-month increase of 2.76% in June 2012 to R437.71 per transaction.

According to Marc Sternberg, MD of Spark ATM Systems, the month-on-month and year-on-year increased cash withdrawal activity was recorded across all sites - including wholesale, retail, petrol, farming and hospitality sectors.

These increases are in line with the start of the mid-year school holiday season that kicked off towards the end of June when parents typically take their children away for holidays trips. This is traditionally followed by increased spending on food, petrol and other holiday activities,” says Sternberg.

Ronel Oberholzer, Principal Economist Sub-Saharan Economics at IHS Global Insight, says, “The increased cash withdrawals at petrol stations in June 2012 already suggests a positive start to the mid-year holiday season where people frequent these outlets more for fuel.  Convenient stores at these outlets also often record increased sales during the holiday season due to increased foot traffic and ‘after-hour shopping’ services.” 

Sternberg says that the latest SCI also reveals a huge increase in consumer spending activity at wholesale locations. “We recorded a 25.29% year-on-year increase in cash withdrawal activity at wholesale locations, as well as the highest average cash withdrawal value for a location in June at R446.41.

These figures are significant and indicate that consumers are trying to stretch their rands by buying at wholesale outlets, which is increasingly becoming a more popular option as consumers try to save money in tough economic conditions.”

Oberholzer agrees and says the fact that consumer debt levels remain stubbornly high is fueling a more savings-orientated approach to spending, which may include shopping in bulk at wholesale locations.

Sternberg says because the SCI has proven a reliable leading indicator for Stats SA Retail Trade Sales (RTS) figures it is likely that June RTS figures will also show a strong uptick in month-on-month and year-on-year values. “Retailers should use the current school holiday season to their advantage with sales or other in-store specials to increase consumer spending.”

He adds that relief in the form of the recent petrol price decrease should also help provide more disposable income for consumers in the second half of 2012. “In addition, the prospect of an interest rate reduction will be positive for cash withdrawal activity. Lower interest rates mean that consumers spend less on interest costs leaving them with more income to spend on goods and services,” concludes Sternberg.

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