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Holiday Sales
Feb/March 2012

Strong holiday sales

promise a good year

The holiday sales period was even better than what retailers expected — or at least met their expectations, respondents in Sports Trader’s annual holiday sales survey reported. This positive start to the year could bode well for retail trading during 2012, reports ILHAAM HOOSAIN

All retailers look forward to that time of year when the only thing heard is the ringing of their tills. The expectation of sales over the December holiday period have more thumbs up than thumbs down, according to the annual Christmas survey conducted by Sports Trader this year. 57% of the respondents said that their December sales (pre-Christmas) met their expectations, 32% of respondents said that December sales were better than expected and 11% said they did worse than they expected.

Compared to the 2010/2011 period, 51% of stores were visited by more customers in the 2011/2012 period while 27% reported the same number of customers and 22% said they were visited by fewer customers. This is a lot more positive than last year’s responses when 36% said they did worse than expected (this year only 11%) and 36% of stores saying that they served fewer customers (this year only 22%).

The elevated number of customers entering the store compared to the 2010/2011 period reflected in terms of sales as 38% of retailers said that their sales were a little higher than last year, 24% said that it was a lot higher than last season and 22% said they made about the same as last year. Meanwhile, 8% of retailers said their sales were a lot less than the previous holiday season.

Retailers were asked to indicate A lot higher if sales were up higher more than 20% compared to the previous year, A little bit higher if sales were up less than 20%, indicate A little bit lower when sales were down less than 20% and if it was down more than 20% to indicate A lot lower.

Some retailers, however, did run out of stock during the 2011/2012 holiday season. Because of last year’s poor sales figures retailers were more cautious and ordered less stock for the 2011/2012 season. Many distributors close down mid-December to early January and many retailers were unable to replenish their stocks. This affected sales across the board. December sales are retailers’ main source of income and those decisions could affect their businesses for the next few months until December 2012.

It seems that January reflected the same increase in sales as the pre-Christmas period. Forty-three percent of respondents said that January sales were a little higher when compared to the previous year, 8% said that sales were a lot higher, while about a third (35%) said that sales were about the same. Only 11% said that sales were a lot lower and 3% said sales were a little lower.

When compared to December 2011 more retailers (24%) noted that sales were a lot higher than the 8% of retailers who noted that sales were a lot higher in January. This could mean that more consumers were prepared to splurge their Christmas bonuses prior to the start of the new year and were prepared to spend less in January.

Most of the respondents in this year’s survey were independent retailers (68%) with the largest group (51%) trading in major cities like Cape Town, Durban and Johannesburg. About a third (30%) of respondents were sports specialist retailers, 19% were outdoor retailers, 27% were sports and outdoor retailers and 41% were footwear and clothing retailers.

Sales by region

Retailers situated in holiday destinations (24% of all respondents) said that their sales were higher than last year with a growing 55.5% agreeing. Last year 80% of the holiday destination retailers responded by saying that sales were worse than they expected.

“There were lots of upcountry holiday makers,” says Pam Stoltz of Target Line in East London. “They just loved our shop and would spend hours browsing and end up buying a storm!”

About a quarter (24%) of this year’s respondents were from the platteland and two thirds (66.6%) of them said that their December sales were higher than expected. This shows that overall people had extra money to spend at the end of 2011, even in the country areas.

Retailers pointed out that foot traffic was higher in malls than in the rest of the city. Saleem Khamissa of His Place Men’s Boutique’s, who has four stores in KwaZulu Natal, says ”there were more feet in malls and centers and less in other areas.”

This confirms the trend identified by the SA Council of Shopping Centres when they reported in the beginning of December that sales figures “surprised on the upside” for the preceding two months after year-on-year growth had tapered off to 2.5% in June 2011.

Expectations met?

The brisk festive shopping continued throughout the country as 51% of retailers say that compared to 2010/11 their store was visited by more customers, although several retailers reported that the shopping season started late. Pippa Hitchins from The Swimshop said that business was very quiet for the first three weeks of December, to the point that she was getting concerned, but then the week before Christmas business was unbelievable. With Christmas Day falling on a Sunday in 2011, Friday 23 and Saturday 24 December proved beneficial for most retailers.

Also, because most customers took leave from the 16th of December, they would have had more than a full week to do Christmas shopping.

Eye on the price

The items consumers had their eye on this festive season were mid-priced items (59%). Just over half of consumers (51%) went for the functional, but still high priced items (e.g. shoes/clothes etc). Shoes were leading the pack as the number one selling item, shirts and t-shirts coming in at close second. Other popular items were beachwear, cricket bats, backpacks and bags.

Greg Bing from A.P. Jones said that anything that was on promotion sold well. Only 11% of retailers sold luxury high priced items. Furthermore, 19% of retailers sold lower priced items.

More money for holidays?

As much as economists urged people to be cautious with their money, figures are what really matters. It seems that people had more extra money to spend at the end of the 2011 year on holidays and holiday items when compared to the previous year. “We had a lot of customers going to Kilimanjaro in January 2012 who bought their stuff in December. There were also lots of South Africans that went overseas for a normal tourist holiday,” says Leni Hamilton from Hikers Paradise.

Money being a scarce commodity, it seems people opted to swipe their credit cards during the festive period, rather than pay for cash.

Good and bad news for retailers in 2012

It could be a good year for retailers in 2012, because:

  • Sports and recreation retail prospects for the year are looking positive. Formal retail sales are expected to grow 4.5% during 2012, the Bureau of Market Research (BMR) at UNISA predict, with the growth led by sales in sport and recreation goods, clothing and accessories, footwear and glass, crockery, cutlery and kitchenware — all expected to grow 4.7%-4.9%. The research report by BMR executive research director Prof. DH Tustin also indicates that retail sales are expected to follow seasonal trends over the past ten years with about 47% of sales in the first and 53% in the second half of the year.

  • Retail sales in SA shopping centres could grow 4.5% in 2012 and even more in 2013, the SA Council of Shopping Centres (SACSC) predict in their Q1 2012 economic report. Low interest rates and rising disposable incomes are expected to contribute to sales boosts. Economic growth in 2012 could also be supported by a slightly weaker exchange rate. Year-on-year November 2011 retail sales grew 6.8%, while interest rates remain at their lowest levels in almost four decades. SA formal retail sales growth peaked in the 2004–2007 period (respective growth of 11.2%, 8.2%, 11.9% and 6.5%) but reached a low in 2008 (0.3%) and 2009 (-3.7%). In 2010 sales growth recovered to 5.1%, but dropped to 4.1% in 2011.

  • Retail trade sales for the three months ended November 2011 grew 7.3% compared with the three months ended November 2010. The largest contributor to this increase was general dealers (5.6% and contributing 2.1 percentage points), followed by retailers in textiles, clothing, footwear and leather goods (8.5% and contributing 1.7 percentage points).

  • After years of job losses, employment numbers in the SA clothing and textile sector are showing slight growth. The number of people employed in September 2011 (57 728) is slightly more than the 56 985 employed in October 2010, Minister of Trade and Industry Rob Davies told the Clothing & Textile Industries National Bargaining Council AGM at the end of November. He ascribed this success to the Production Incentive Model introduced in the clothing sector, which Davies believes could be applied in other manufacturing sectors. At the onset of the 2008/09 recession 200 000 jobs were lost in the manufacturing sector. The Preferential Procurement Framework Regulations that came into effect on 7 December promotes the procurement of locally manufactured goods by government.

  • Reasons for caution

  • Average inflation expectation for 2012 went up from 5.9-6.1% according to the latest BER Inflation Expectation survey during 2011 Q4 — the first time since 2010 Q4 that inflation for 2012 is forecast to average above the 6% upper target limit. Respondents also raised their inflation forecast for 2013 by 0.1 percentage point to 6%. Business representatives expect headline CPI to rise to 6.2% in 2012 (up from 6.1% previously). Trade unions expect inflation to peak at 6.3% in 2012 (previously 6%), before moderating to 6.1% during 2013 (previously 5.9%).

  • Manufacturing business confidence stabilised at relatively low levels with the index points going down from 36 to 35, the Bureau for Economic Research’s (BER) latest manufacturing survey indicated. Manufacturers report that the relatively low confidence index hides the improvements in business conditions. Domestic demand conditions improved and order volumes rose to a 4-year high, whilst domestic sale volumes also increased. Export market conditions also improved significantly.

  • The current economic climate has hampered growth and job creation in the SME sector, a research report indicates. The first headline report Priming the soil: Small Business in South Africa (www.smegrowthindex.co.za) was compiled by research company SBP as part of their three-year survey of 500 SMEs to track performance and experience. Less than half the companies have grown their staff numbers over the past five years and less than a third created new positions in 2011. The major barriers to growth have been identified as inflexible labour laws, BBBEE and SARS inefficiencies.


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