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But December, the most important trading month, shows decrease in sales

South African retailers ended 2018 on a bleak low after suffering the first negative annual growth since February 2017.

After looking forward to a pick-up in sales during December, the sector’s most important trading month as many consumers go on holiday and splash out on Christmas shopping, sales volumes actually decreased.

Stats SA data has revealed that December was a tough month for retail in the country after sales volumes fell by 1.4% year-on-year. On the upside, though, retailers can be happy that at least November was a good trading month.

“The poor performance of retailers in December came after a much better November, when Black Friday boosted sales to 2.9% year-on-year (volume).

“The Black Friday effect has been growing in strength in recent years, resulting in a partial shift of sales from December to November,” it says.

Retailers can also take heart that during last year as a whole, the volume of retail trade grew 2.1%, compared to the previous year. In drawing these conclusions, Stats SA analysed data from seven types of retailer: l General dealers. l Food, beverages and tobacco in specialised stores. l Pharmaceuticals and medical goods; cosmetics and toiletries. l Textiles, clothing, footwear and leather goods. l Household furniture, appliances and equipment. l Hardware, paint and glass. l All other retailers. It notes, then, the increase last year is owed largely to retailers in household furniture, appliances and equipment, which saw a 10.6% increase, as well as “other” retailers which showed increases of 7.6%. However, the decline in sales during December is due to negative growth rates reported by the other five retailer types, with the biggest contributors being textiles, clothing, footwear and leather goods, with a decline of 2.7% and general dealers with a decrease of 1%. But South African retailers are not alone. In the UK, online retailers suffered their worst Christmas sales growth in almost 20 years, reports the county’s retail association IMRG. Although the growth was still positive at 3.6%, the month-on-month performance slid by 15%. In particular, electrical retailers reported “a very tough month of trading” with a 15.9% decline year-on-year, IMRG says. Furthermore, Bloomberg reports that sales at brick-and-mortar retail stores in the country fell 1.9% in December on a like-for-like basis. The economic downturn and subsequent pressure on South Africa’s retail sector, however, has not deterred the supply of retail outlets, with new shopping centres still poised to come onto the market. Most of these, however, are community and neighbourhood shopping centres which have been performing better than the larger retail formats, states JLL in its latest South African Retail Report. Statistics SA data shows 436 783m² of retail building plans have been passed, which “gives a rough indication of future supply”. But while the trading density growth trend and stable vacancy rates might be a positive sign for the industry, JLL says “it should be noted that we are still operating in a difficult economic environment which poses a challenge for growth going into 2019”. “Interestingly, Sapoa reports there has been an increase in take-up of retail space by health and beauty stores which has positively shifted the tenant mix for shopping centres,” JLL says.  

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