Question 2 Demographic change
The World Bank (2015) released an economic update concerning the demographic growth of the South African population. In fact, as cited by the world bank, South Africa by using efficiently its growing working-age population could increase its economic growth by exactly 5,4% by 2030.
The World Bank through its reports revealed that South Africa’s labour population force has incredibly increased and will continue to do so in the next fifty years.
It also refers to the issue of availability of jobs in South Africa which is not in adequacy with the huge increase in its population, which population represents for the country a window of opportunity in terms of a rise in the standard of living. South Africa will have then to take serious measures in order to be able to use its population in an efficient way, which measures are being defined as delivering basic education and post-school vocation training. Finally, apart from that of the World Bank, through its reports pointed some recent economic developments in South Africa which according to it is below the average growth rate.
Looking at the details evoked by this article, we can clearly see that Woolworth as a retailer faces a larger population which can be a positive impact on the business in terms of a larger clientele. However, even if the question asked will be to know if this population is going to be able and willing to really get involved in purchasing Woolworth products, an increase in population and especially in terms of working-age population is always an element to consider as a business.
The World Bank. (2015, August 17). South Africa’s Changing Demographic Could Lift Growth to 5,4% by 2030. Retrieved from http://www.worldbank.org/en/news/press-release/2015/08/17/south-africa-demographic-lift-growth
Statistics South Africa (2018) published an article related to the increase in the value added tax (VAT) and food inflation in South Africa. Its article refers to the fact that although VAT has increased in April 2018, some of the food especially oil, bread, fruits, and sugar are cheaper than they were last year.
However, food items like fish, meat, vegetables and dairy products are even more expensive than they were before.
Statistics South Africa revealed that the reasons for this inflation are not only related to the increase in the VAT but also to a hard time in the general economy of the country and to natural circumstances especially drought that touched the country since 2015. In fact, the drought which slowed down agricultural production had a more important impact on production of meat and products related to animals because it was and still is harder for this sector of production to recover from it.
The impacts that this economic change can have on Woolworths are multiple. In fact, as a retailer of products of first quality, Woolworths might have to increase its prices which are already higher than some of the retailer in the country. This could lead to a decrease in the purchasing power of its customers. Also, because most of the suppliers of Woolworths are national farmers, the economic situation in addition to the recovery from drought might lead Woolworths to look for other suppliers in terms of meat and vegetables and dairy products.
Statistics South Africa. (2018, July 31). Despite the VAT increase, food inflation continues to fall. Retrieved from http://www.statssa.gov.za/?p=11366