Supply chain disruptions hit SA traders because of coronavirus
South Africa reported 61 cases of coronavirus yesterday, and the number was expected to escalate.
South African retailers said they had taken steps to manage the impact of the coronavirus.
Woolworths, one of South Africa’s biggest food and clothing retailers, on Friday reiterated a warning from earlier this year that some of its stock would be impacted in the coming weeks.
“We anticipate that the extended Chinese New Year may create a delay in stock availability in certain clothing product categories. However, we are actively putting in place various plans to mitigate this risk,” said Woolworths, which operates in South Africa and Australia.
Woolies said there had been little impact on its foods business. “We will continue to work very closely with our suppliers on potential contingency plans in the event the situation changes.
China, South Africa’s biggest single trading partner, accounts for about 60 percent of South Africa’s clothing and textile imports and is under lockdown to contain the virus resulting in an impact on exports from that country. However, last week reports emerged that the lockdown has been easing with some workers reporting back to work, which may alleviate the supply disruption.
Lulama Qongqo, an analyst at Mergence Investment Managers, said on Friday that South Africa’s fashion retailers relied on the Asian market for finished products and imported fabrics. She said the local retail industry was likely to feel the pinch due to supply chain disruptions and travel restrictions.
“South African clothing retailers will have a difficult time. What might save them is that they may have pre-ordered stock. However, if the disruptions due to the coronavirus continue beyond two to three months the financial performance of retailers for the next half of 2020 will be below expectations,” said Qongqo.
She said over and above the coronavirus, consumers were in a tough space due to the subdued economic environment.
“The coronavirus will complicate things for retailers, because discretionary spending is already under pressure and people are now focused on spending on basic necessities,” said Qongqo.