BMR Forecasts Formal Retail Trade Sales to Reach R1.64 Trillion in 2026
The Bureau of Market Research (BMR) has released its latest Macroeconomic and Retail Trade Sales Forecast Report for 2026, projecting continued growth in South Africa’s formal retail sector despite persistent economic, geopolitical and structural challenges confronting households and businesses. According to the report, formal retail trade sales are expected to increase by 7.0% in nominal terms and 2.1% in real terms during 2026, with total formal retail sales forecast to reach approximately R1.64 trillion. The forecasts are based on the BMR’s probabilistic macroeconometric modelling framework, which incorporates macroeconomic, demographic, consumer expenditure and retail industry variables together with alternative growth scenarios.
Consumers continue to spend, but more selectively
The report finds that South African consumers remain under significant financial pressure due to slow income growth, elevated unemployment, rising living costs and global uncertainty. Nevertheless, household expenditure is expected to remain resilient, supported by moderating inflation, lower interest rates relative to previous years, continued social grant support and ongoing improvements in electricity supply stability. The strongest-performing retail categories in 2026 are expected to include:
- General dealers;
- Clothing and footwear retailers;
- Pharmaceutical and healthcare-related retailers;
- Household furniture, appliances and equipment retailers; and
- Value-oriented retail formats.
Food, beverages and tobacco are expected to remain the largest retail expenditure category, accounting for nearly half of retail expenditure (49.8%) through formal retail channels.
Value retailing emerging as the dominant growth theme
The report highlights a significant structural shift in consumer behaviour, with value-for-money becoming the dominant purchasing driver across most income groups.
Discount-oriented retailers, private-label products and promotional retail formats are expected to continue gaining market share as consumers seek to stretch constrained household budgets. “South African consumers are not necessarily spending less; they are spending differently. The dominant trend shaping the retail sector is value-seeking behaviour, with consumers increasingly prioritising value, promotions and convenience when making purchasing decisions,” said Prof Deon H. Tustin, CEO of the Bureau of Market Research.
Digital payments and e-commerce continue to transform retail
The BMR report identifies digitalisation as one of the most significant structural changes occurring within the retail sector. Digital transfers and internet-based payments are projected to account for approximately 45% of retail payment value during 2026, continuing a trend that has accelerated since the COVID-19 pandemic.
At the same time, e-commerce and omnichannel retailing are expected to expand rapidly as consumers increasingly integrate online and physical in-store shopping experiences. “The future of retail is increasingly digital. Retailers that successfully combine physical stores, e-commerce platforms, digital payments and data-driven customer engagement strategies will be best positioned to capture future growth opportunities,” said Prof Tustin.
Township retail and informal markets present significant opportunities
The report identifies township retail markets as one of South Africa’s most important long-term growth opportunities.
Population growth, urbanisation, increasing digital connectivity and the expansion of informal and semi-formal retail ecosystems are expected to support strong growth in township consumer markets over the next decade. Although the report focuses on the formal retail sector, the BMR notes that the informal retail economy remains an important and rapidly evolving component of South Africa’s broader consumer landscape particularly as some of the items traded in the informal retail sector are sourced from formal retail ecosystem.
Twenty strategic retail trends identified
The report identifies twenty key retail trends expected to shape the industry between 2026 and 2030. Among the most significant are:
- Consumer value-seeking behaviour;
- E-commerce growth;
- Omnichannel retailing;
- Township and informal-market expansion;
- Data-driven personalisation;
- Loyalty ecosystems;
- Artificial intelligence and automation;
- Private-label product expansion;
- Digital payment adoption; and
- Supply-chain optimisation.
According to the report, the five trends likely to have the greatest strategic impact on the future of retail entail:
- Consumer value-seeking behaviour;
- E-commerce growth;
- Omnichannel retailing;
- Township and informal-market expansion; and
- Data, loyalty and AI-driven personalisation.
Risks remain elevated
The report cautions that the retail outlook remains vulnerable to several domestic and international risks, including:
- Geopolitical conflict and oil price volatility;
- Inflationary pressures;
- Slower-than-expected economic growth;
- Labour market weakness;
- Infrastructure and logistics constraints;
- Exchange-rate volatility; and
- Global trade disruptions.
The report notes that recent evidence from household finance surveys suggests consumers are increasingly reducing discretionary expenditure and postponing non-essential purchases, reinforcing the importance of scenario-based planning for businesses.
Outlook for 2026
Despite these risks, the BMR concludes that the South African retail sector remains positioned for moderate growth in 2026, supported by resilient consumer demand, ongoing digital transformation and evolving structural shifts in retail business models. “The South African retail sector continues to demonstrate remarkable resilience. While economic growth remains constrained and risks are elevated, retailers that align themselves with evolving consumer preferences, embrace digital innovation and maintain a relentless focus on customer value are likely to outperform the market over the medium term,” concluded Prof Tustin.
Key forecast highlights for 2026
- Formal retail trade sales: R1.64 trillion.
- Nominal retail sales growth: 7.0%.
- Real retail sales growth: 2.1%.
- Household consumption expenditure: R5.34 trillion.
- Retail inflation: 4.9%.
- Largest retail expenditure category: Food, beverages and tobacco.
- Fastest-growing retail categories: Clothing and footwear; household furniture, appliances and equipment.
- Digital payment share of retail transactions: 44.8%.
- Dominant retail trend: Consumer value-seeking behaviour.
Report authored by: Prof DH Tustin and Prof CJ van Aardt