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Q1 2018

Holiday sales:
How the industry experienced trading

How did sport, outdoor and lifestyle retailers experience the very busy November to January trading period? Did the winds of change promised by the election of Cyril Ramaphosa as ANC president blow renewed confidence into consumers, or did the transition uncertainty contribute to shopper wariness? We received some interesting responses from retailers in our annual Sports Trader holiday sales survey

In January this year business confidence reached its highest level in two years, namely 99.7 — a 3.3 index points better than in December, when business confidence was also higher than in November. This can be attributed to Cyril Ramaphosa winning the ANC presidency, say the South African Chamber of Commerce and Industry (Sacci).

And this was even before Team SAs winning roadshow in Davos, or Goldman Sachs declared that South Africa will be the big emerging market to watch in 2018.

“Apart from a more improved and positive business mood, there are indications that the pace and direction of change reflects a more upbeat business climate,” Sacci said. “There is the expectation that new leadership will lead to more pragmatic and predictable business and economic policy options.”

Retailers in the sport, outdoor and lifestyle industry who responded to our annual survey on holiday sales, are a bit more ambivalent: 52% feel positive about trading prospects in 2018 — but 41% are negative. The weak economy was the main reason given by the respondents who feel negative, but the biggest single group (36%) are positive that renewed consumer confidence will make 2018 a great retail year. For 8%, however, 2017 was such a bad year that things can just improve.

“2017 was a bit better than 2016, and I hope 2018 will be even better, says Mark Kruger of Slingervel. “But, I am still not sure that CR (Cyril Ramaphosa) will make a difference.”

Customers were not influenced by the ANC election at all, reported 67% of the respondents to our survey. “Sales in December are more affected by current economic conditions than political changes,” responded a retailer who wished to remain anonymous. “Our sales come from the man on the street and he/she can only spend what is in his pockets or what he can borrow...

“The change in politics will have a bigger effect later when the import prices are modified because of a stronger or weaker Rand. I am positive the Rand will remain stronger than it would be if the Zuma Camp had remained (he was right -ed), so imports and thus prices should remain constant and even drop a bit...that would be great!”

On the other hand, 20% reported that the election of the new ANC president influenced their customers positively. An equal number (10%) reported that they believe the renewed hope of economic revival inspired their customers to spend more in late December, as well as in January.

Sadly, the optimistic messages had not reached most of the consumers who did their January back-to-school and -work shopping at sport, outdoor and lifestyle retailers.

They experienced no sales growth — or a drop in sales turnover — in January 2018 compared to the previous year, reported 77% of the retail respondents.

This is not good news for sport retailers who rely on the back-to-school sales for a good start to the year.

About a third (34%) of the respondents said that their January tunover was about the same, but 43% reported a sales drop of 10-20%. There are, however, 24% of the respondents who experienced better sales in January this year than last year — 8% say their sales improved by more than 10%.

Interestingly, December sales were generally higher than in January. Nearly half (49%) of the respondents said their 2017 sales were higher than in 2016 — 8% reported more than 20% year-on-year sales growth — but, 46% said their sales were lower. For 5% sales remained the same.

This could, however, be considered a drop in sales. “We did similar turnover to 2017, but with inflation we should be looking to increase turnover annually,” says an anonymous respondent.

“But, we are still thankful for our current sales looking at the economy as a whole...the drought also has a big effect on especially the rural areas where we trade!” he added.

The weak economy is also blamed for the fact that few customers spent money on luxury or high priced items in the run up to Christmas. Most (59%) respondents report that customers mainly bought mid-priced functional gifts, while 21% said that most of their customers bought entry level necessities. “People are spending less on Christmas presents and more on vacations and food,” Kruger believes.

About 13% of respondents, however, would agree with the respondent who commented “branded goods at a fair price is a constant seller.”


Black Friday: the elephant in the room

It took South Africans about 60 years to cotton on to the American Black Friday custom — and for some in the industry it is 60 years too soon. It was introduced here tentatively in 2015, grew in popularity in 2016, and became an established trend in 2017.

For many industry retailers Black Friday may just as well be a swear word, so strong are their feelings about this discount day.

The 28% who believe that Black Friday on 24 November had a negative impact on their Christmas sales, will probably agree with the retailer who commented “lower Christmas sales had nothing to do with the ANC shenanigans, but rather the hell that is Black Friday!”

And no, he did not participate by offering discount deals.

Several respondents agreed with Bazil Southall of Promens Menswear in Bloemfontein, who found that his customers did all their Christmas shopping during the discount days, and that his November trading was therefore better than in December, which was affected negatively.

Another retailer, who did not participate, found that “people hunted bargains, but bought stuff they did not need. There was real chaos in some stores.”

But, he will probably participate in 2018 to get rid of unwanted stock, he added.

Of the 30% retailers who felt positive about Black Friday, 22% said that they benefitted from participating because it helped them to get rid of old stock. The other 8% said that it attracted new customers to their stores.

For the biggest group of retailers who responded, however, Black Friday was a non-event — with 42% reporting that it had no impact on their December sales and 36% saying they did not participate.

Most of the respondents (44%) who did participate gave big discounts of more than 20%, while 28% said they gave 15-20% discounts and 20% offered less than that.

South African retailers across all categories are not entirely convinced that Black Friday is such a good idea — but support is gradually growing.

A survey conducted by the South African Council of Shopping Centres (SACC) in 75 shopping centres during November 2017, showed that an average of 3.2% of tenants participated in Black Friday in 2015. This grew to 21% in 2016. In small regional shopping centres the number of tenants who participated grew 31% from 2015 to 2016.

Black Friday obviously worked for the shopping centre management, with 71% of the responding centres reporting that they had the highest influx of footfall year-on-year on the day, with an average increase of up to 13% in the month of November.

Last year, several shopping centres introduced marketing initiatives to guide customers on where to get the deals within their centres as well as offering free parking on Black Friday. Menlyn Park, for example, distributed 10 000 branded shopping bags that contained information on tenant’s offers and a bottle of water. In addition, the centre ran two competitions on their social media platforms, offering shopping vouchers.

The super regional shopping centres attracted the most Black Friday shoppers, although some small regional centres also received a lot of support. The regional Mall of the North in Polokwane, for example, recorded a 26% foot count increase when compared to Black Friday in 2016. The Musgrave Centre in Durban recorded a 23% footcount growth year on year. East Rand Mall in Johannesburg had a footcount increase of 37% on 24 November 2017.

Westgate Shopping Centre conducted an onsite Black Friday customer survey: 81% of the sample of over 250 shoppers said they would be supporting the centre’s Black Friday promotions in 2018.

Sneaker deals popular online

But, while many brick-and-mortar stores have not yet bought into the idea of discounting goods shortly before the major Christmas shopping period, online retailers love it.

According to online fashion retailer, Superbalist, they experienced the biggest trading day in its history on Black Friday 2017 with over 118% year-on-year growth. In pre-Black Friday polls Superbalist conducted, participants mainly asked for sneaker deals, and on the day, sneakers sold more than any other category.

Takealot.com reported a record 2.2-m visits to its site, who spent more than R87-m on the day. A few hours after the site opened there was a 280% year-on-year growth in visits.


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