Antionette Coetzee – Retail analyst
Macro-economic data signals that consumers are feeling the pinch. Although the stressors remain largely the same as this time last year, there has been widespread industrial action during 2014 from which many consumers still need to recover and there is certainly less of an underpin from unsecured credit, which could put some additional pressure on household disposable incomes.
This will be the case across most of South Africa, but there are a few areas that are worse off. Some regions have been harder hit by industrial action and job losses, which may mean disappointing retail sales growth.
This trend is set to continue, as consumers in South Africa will remain under pressure for some time to come. While it’s tough to call, we believe retailers in the apparel, accessories, jewellery, cosmetics and electronic categories to be best positioned to benefit from festive spend this year.
On the other hand, indications are that big-ticket item categories, such as furniture and appliances, may fair less favourably. We’re also nervous about retailers that are very dependent on credit as there will be significantly less support for spend from unsecured credit this year. More budget conscious consumers will likely choose to limit their credit use.
When it comes to gifts, early indications are that gift cards will be popular again this year. It’s a simpler gift and many people find them budget friendly. When it comes to presents, newly-launched technology, such as the iPhone 6, will be at the top of many Christmas wish-lists.
And that isn’t the only thing people want this festive season. They want a hassle-free shopping experience, with easy access to parking, extended shopping hours and desired brands in one location. For many, a child-friendly environment is also important.
Because most customers enjoy the festivities of Christmas shopping, great entertainment can drive footfall, which hopefully translates into increased spending too. This, combined with the recent postal strike, means we don’t foresee a huge shift to online shopping this year. Many customers choose to shop at retailers that have customer friendly return and exchange policies, especially because when it comes to gifts, it’s the recipient that is likely to do the exchange not the purchaser.
While the peak festive shopping season heralds a welcome increase in ringing tills it also brings a complex set of challenges for retail centres. It’s well published that mall security is top of mind for landlords right now, but managing the increased number of visitors, parking flows and cleanliness are also huge challenges.
Many of our initial expectations for festive trading are now being refined due to load shedding. South Africans are resilient but one of our customer’s biggest frustrations is the inability to plan due to the unpredictability of load shedding. While we may be wrong, we believe that customers will head to larger malls in the hope that generators keep the lights on. We also expect customers will try and complete their Christmas shopping in fewer visits reducing the opportunity for retailers to capture impulse spending. While load shedding is most certainly a concern over December and into 2015, there are so many other dynamics at play at present that it’s near impossible to isolate the impact on general spend.
