INVESTMENT OUTLOOK: Could a blue wave in the US transform the red wave in local retailers?

South African retailers such as Truworths and TFG Africa have experienced a difficult year, with many struggling to maintain profitability amid intense competition and inflationary pressures. The recent US "blue wave" election, which may lead to lower oil prices, could bring some relief to local shoppers and potentially boost the fortunes of South African retailers.

However, the impact of these lower fuel prices on prices at local pumps is still uncertain, and it remains to be seen how long any relief will last. South African consumers, which are among the most price-sensitive in the world, have become adept at seeking out deals, putting pressure on retailers to offer discounts to attract customers.

This has resulted in gross margin compression, with retailers forced to offer discounts just to draw in shoppers. Truworths has taken a different approach to its peers by prioritising gross profit over top-line sales growth. While sales fell by 2.7% in the 17 weeks to 25 October 2026, gross profit was "maintained" compared to the previous period.

TFG Africa, on the other hand, has been focusing on optimising its sales channels, closing underperforming stores and growing online sales. The company reported a 3.8% increase in sales for the six-month period, with certain categories such as beauty and jewellery posting strong performance. Despite these positive developments, credit sales declined by 2.4%, and gross debtors increased by 3.0%, with net bad debts also rising by 10.2%.

The outlook for South African retailers remains uncertain, but if fuel prices do decrease, it could provide a much-needed boost to the sector ahead of the crucial Black Friday and festive shopping season.