Retailer confidence has bounced back heading into the year-end period, offering a boost for a sector that has spent most of 2025 under pressure. After falling below the long-term average earlier in the year, retail confidence jumped from 32% to 43% in the fourth quarter, according to the latest BER retail survey. This is a return to levels last seen in the first half of the year and marks a turnaround in sentiment.
Confidence is a powerful indicator of how well retailers believe their businesses are performing and what they expect in the months ahead. When confidence improves it usually means companies are seeing better sales, stronger demand and improved profitability. It also signals that consumers are spending again, a key driver of the economy.
“The latest results support 2025 Q4 being another festive period of strong consumer spending and vibrant retail activity,” the BER said. “Importantly, the results are an encouraging sign of consumer momentum that extends beyond two-pot spending into a broader story of improving household finances and consumer health rather than one of just temporary relief.” According to the survey released on Thursday, trading conditions improved noticeably in the fourth quarter, supported by a sharp rise in retail sales volumes. On a seasonally adjusted basis, sales volumes climbed from minus 15 to plus 2 index points, a turnaround after months of weak performance.
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Most retail categories recorded stronger sales, with only semi-durable goods (such as clothing and footwear) lagging. Durable goods retailers, including hardware, furniture and household appliances, posted the strongest gains. Their recovery is being fuelled by improved household credit growth, lower pressure on disposable income and rising confidence among consumers who are now more willing to make big-ticket purchases.
Non-durable goods retailers, which sell everyday essentials, also reported broad-based improvements, the survey found. Official retail data supports this picture. Stats SA on Wednesday reported a 2.9% year-on-year rise in retail sales in October, with clothing, home goods and hardware driving the improvement.
Discretionary spending, items people buy when they feel financially secure, led the way, suggesting households are slowly regaining spending power after a difficult few years. Only one category, food and beverage retailers in specialised stores, recorded a decline. Meanwhile, the PayInc economic index, which tracks the value of electronic transactions across the country, also held steady in November and remained higher than a year ago.
While the recovery is still in its early stages confidence is improving across several parts of the economy, from new vehicle dealers to building contractors. “From exiting the Financial Action Task Force’s greylist to the first credit rating upgrade in 20 years, the progress on structural reforms, an improvement in fiscal metrics and moderate inflation, the year turned out better than initially expected,” independent economist Elize Kruger said. “While it will take time — given the lags in the economy — before these translate into a higher economic growth trajectory, the building blocks for improvement have surely been laid.” Rising confidence among businesses and households can create what economists call a “positive feedback loop”, she said.
Kruger said when retailers and companies start to believe the economic environment is improving, they are more likely to invest, hire and expand. Similarly, when households feel more secure, thanks to better earnings, lower inflation and reduced rate pressures, they spend more. Over time, this combination can help lift the entire economy.
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