The country’s top retailers yesterday took full advantage of consumers’ panic buying on escalating fears of the spread of the coronavirus, pushing retail stocks 0.62percent higher to 3787.7points.
Shoprite rose 13.63percent to R117.13; the Spar Group inched up 11.34percent to R117.13; Pick * Pay rose 8.56percent to R53.23; and Woolworths rose 8.25percent to R31.49.
Pharmaceuticals also rose, with Clicks gaining 9.09percent to R239.46, while Aspen surged 7.36percent to R58.46.
Clicks confirmed that the high demand had thrown the industry into recovery mode.
Chief commercial officer Rachel Wrigglesworth said South Africans were stocking up on essentials.
Wrigglesworth said the group had decided to limit products to six items per customer in their stores.
“This is on all our front-shop products, including hand sanitisers, toilet paper, vitamins, children’s medicine and pain relief,” Wrigglesworth said.
The surge in retail shares boosted the local bourse, with the FTSE/JSE All Share Index rising 2.67percent to 41579.58 points and the Top 40 Index increasing 2.96percent to 37375.33points by the close of trade.
Analysts, however, warned that retailers were unlikely to sustain prolonged panic-mode demand as the impact of the coronavirus had created production and supply bottlenecks across the globe.
Sasfin senior equity analyst Alec Abraham said the panic-buying would not last, because South African consumers were getting poorer every year, with multiple years of lower gross domestic product per capita.
“The real wage, employment, credit none of these are in positive territory for the South African consumer. The retail shares will show that down the line,” he said.
Abraham said the uptick was not a boon at all, as consumers were hoarding now and the additional cost would be borne later.
“The virus and the reaction to the virus by consumers is far more damaging than any gain for retailers in the short-term,” he said.
Wrigglesworth said Clicks had significantly increased orders across all high-demand categories and was working closely with suppliers to ensure that stock reached stores as quickly as possible.
Mergence Investment Managers investment analyst Lulama Qongqo said the buying spree was logistically not sustainable for the retailers, as they were not traditionally equipped for prolonged extraordinary demand.
Qongqo said the bubble would burst soon.
“Panic buying happens in stages,” Qongqo said. “They are bulk buying now, and then the pantries will be full for quite some time. Then there will be shorter supply runs, shorter footfalls for the retailers. Even if the unprecedented demand is sustained for, say, two months while the coronavirus outbreak is sorted, retailers will come to a point where they struggle, certain product lines will be hard to procure.”