According to the Bureau of Market Research’s (BMR’s) 'Macroeconomic and retail trade sales forecast for South Africa 2025' report, retailers that are agile, responsive and informed by robust market intelligence will be best positioned to thrive this year and beyond.

The report shows that South Africa’s retail trade sales are forecast to increase by 7% in nominal terms and 2% in real terms this year.

“The 2025 forecast reflects an economy under strain, but not without opportunity.

“Despite constrained household disposable income and tight monetary conditions in 2023 and 2024, the retail sector is on track to benefit from renewed consumer spending, lower inflation and gradual improvements in infrastructure and governance,” says BMR Economic Research Division head Professor Paul Kibuuka.

Further, the report signals cautious optimism for the retail sector amid easing inflation and interest rates, but warns of structural headwinds, including energy instability, water shortages and weak consumer sentiment.

Total formal retail trade sales are projected to reach R1.53-trillion at current prices this year. The strongest real retail growth is expected in semi-durable goods, led by clothing and footwear, at 7.8%, and recreational and entertainment goods.

Further, food, beverages and tobacco will remain the largest retail product group by expenditure, comprising almost 50% of total retail spend.

Additionally, while non-durable goods dominate in nominal terms, at 74.7% of total sales, durable goods are forecast to record the second-highest real growth rate from 2024 to 2025, the BMR says.

However, the recovery is fragile. Persisting risks such as electricity supply shortages, water constraints, global trade uncertainties and continued high unemployment, currently at more than 32%, may blunt household expenditure and investor confidence, he notes.

“We cannot ignore the complexity of the challenges South African businesses face. However, the data tells us is that there are strategic openings, particularly for value-driven and digitally agile retailers,” says BMR CEO Professor Deon Tustin.

“Success will belong to those who adapt to changing consumer demands and make smart use of analytics, customer engagement and omnichannel platforms,” he says.

The BMR report also finds that there are several megatrends shaping the sector, with e-commerce growth accelerating, supported by innovations such as in-store cryptocurrency payment options and mobile commerce.

Another trend is growing consumer interest in green products, digitally connected devices and premium food brands, which reflects a shift toward conspicuous consumption and lifestyle alignment.

The report also shows that imported goods dominate retail shelves, which exposes retailers to global supply shocks and currency fluctuations, the BMR notes.

While the macroeconomic environment remains volatile, with recent geopolitical escalations in the Middle East triggering a 13% spike in oil prices, retail remains a cornerstone of domestic economic activity, with opportunities for resilience and transformation.

“In a landscape shaped by global tensions, local reforms, and rising consumer expectations, businesses must reimagine their value propositions,” Kibuuka says.