The full retail landscape has growing diversity of local start-up brands and
international powerhouses entering the market. Shoppers have options and
overwhelming choice. They are responding by being more careful with purchases
and therefore making considered choices.
Grocery retailers experience the most immediate impact, and competition to
differentiate their appeal to shoppers, is so quick it sometimes seems
The general retail index shrunk 27% since its April 2015 high, however, 2
retailers are swimming strong against the current. Clicks and Dis-Chem have
both achieved double-digit stock gains. This is due to consumer trends and
store expansion. Trend analysis shows that higher income households are
pursuing consumption trends such as healthy eating, banting, pop-up shops,
homegrown, sustainably sourced…
These movements see loyalty, new entrants, and growth. During 2016 retailers
increased their product offering and expanded into new segments while pushing
price competitiveness. Vulnerable income households struggle to make ends meet
and price strongly influences their decision on where to shop.
A silly season won’t pass by without Christmas advertising and somewhat of a
buying frenzy… People will choose to spend on essentials like housing, electricity,
education, health, and groceries, then reduce debt and lastly spend on leisure
items. Retailers have also curtailed money invested in advertising during the
Christmas season as the buying power of engaged shoppers willing and able to
spend has shrunk.
In exploring how shoppers are engaging with online platforms verses brick and
mortar, The Deloite SA holiday shopping trends report found that “In
2015, over 80% of South African respondents intended to purchase from
brick-and-mortar stores.” Online sales are on a steady growth
trajectory but remains a small value contributor to retail sales. Part of the
favoured shopping experience is to tangibly engage with the product when
purchasing. This view is more relevant to the type of product being shopped
for. Shoppers are also doing fewer trips to retail outlets but spending more.
This behaviour is in line with using resources more effectively to extract the
best possible value.
Here are the top 3 things we can expect to see this silly season:
Shoppers will continue to draw back on gifting and utilise more effective ways
of purchasing, like saving a trip to the mall by ordering online or making
fewer shopping trips and spending more. Online sales are forecasted to grow by
15,5% this quarter, as noted in a report by Kantar (5).
Retailers will advertise affordable value like Makro’s inflation buster
promotion on gifting this Christmas. Surprisingly Makro is the only retailer
from the top 5 brick and motar outlets to post a digital Christmas advert,
indicating that the rest might be relying on traditional print advertising
closer to Christmas to get a more impulsive buying frenzy. The challenge with a
buying frenzy is that it is highly supported by price.
People are spending less and less each year on leisure items, like holidays and
cars. This budget is being redirected to maintaining the current essential
household demands, lifestyle events, and experiences and lowering debt. On the
lifestyle trend, we see a growing desire for health, beauty and fitness/wellness.
Despite the moderate outlook, the silly season does see an upswing in consumer
spending as society wants to participate in the season to ride the reindeer of
positivity and hope.