- As you might expect, food retailers are expected to drive substantial growth in South Africa’s retail sector this Easter weekend.
- The strongest growth however will be seen at hardware stores according to a report from Capital Connect.
- While inflation has increased by 0.3 percent since January, that seemingly won’t deter South Africans from spending large this coming weekend.
This coming weekend is a long weekend thanks to the Easter holidays. The religious holiday is also happening over payday weekend and research from a local fintech suggests South Africans will be spending large.
The fintech in question, Capital Connect, forecasts that revenue in the retail sector will be boosted by as much as R2.2 billion. This as the fintech reports that inflation is tapering and interest rates are set to decline. While inflation may not be increasing drastically, StatsSA reports that it did increase from 5.3 percent in January to 5.6 percent this month. Worth keeping in mind before you throw caution to the wind this weekend.
This R2.2 billion increase in revenue for retailers will largely come from food stuffs which makes sense given that many Easter traditions centre around food.
The products Capital Connect expects to do well include:
- Easter foods such as pickled fish, meat and chicken for roasting, and fruits and vegetables,
- Sweets and confectioneries, including hot-cross buns, Easter breads, Easter-themed chocolates, Easter eggs and crisps,
- Alcoholic and non-alcoholic beverages,
- Selected clothing: Autumn clothing, holiday wear and swimming wear,
- Recreational equipment: Camping equipment,
- Home contents products: Television sets, tableware, pots and pans.
“The Easter season holds promise for retailers that are able to capitalise on the latest consumer trends,” chief executive officer at Capital Connect, Steven Heilbron said in a statement. “Those that are able to quickly expand their product ranges and offerings when there is an upsurge in demand, launch creative promotions, and react fast to volatile market conditions will outperform the rest. Diversification of product lines and channels to market are proving to be particularly successful approaches for retailers in these uncertain times.”
The fintech firm went so far as to outline which sectors of the retail segment will experience the best growth over the Easter period.
- General dealers are expected to see real retail sales grow by 1.5 percent during 2024, compared to a 2.4 percent decline during 2023. They will capture around R1.38 billion in additional sales over Easter,
- Specialist food, beverages and tobacco stores are forecast to achieve real sales growth of 1.3 percent during 2024, compared to a 2.2 percent decline during 2023. They will capture around R521 million in additional sales over Easter,
- Pharmaceutical, medical goods, cosmetics and toiletry dealers to attain sales growth of 0.5 percent during 2024, compared to a 2.2 percent decline during 2023. They will capture around R164 million in additional sales over Easter,
- Real sales growth by textiles, clothing, footwear and leather goods dealers is expected to reach 1.0 percent during 2024 compared to 5.7 percent during 2023. It is not expected that there will be significant additional sales value over Easter in this retail sub-sector,
- Household furniture, appliances and equipment dealers are expected to see a 1.5 percent gain during 2024 compared to a decline of 0.9 percent during 2023. They will capture around R151 million in additional sales over Easter,
- Total real retail trade sales growth by hardware, paint and glass dealers is expected to be 3.2 percent during 2024, compared to a 5 percent decrease during 2023. It is not expected that there will be significant additional sales value over Easter in this retail sub-sector.
We suspect that the reason clothing and textiles may not see as much growth this year as it did last is because Easter is happening in March rather than April so the weather is slightly warmer. The strong growth of the hardware sector also suggests that folks will use the long weekend to perform home maintenance or similar projects.
One aspect of Capital Connect’s report we found particularly interesting was mention of brand loyalty.
“With brand loyalty weakening, it will also be important for retailers to create a strong brand culture to the benefit of sales, customers and employees. Such a brand culture should align with Easter to strengthen the brand value during the Easter shopping season to the benefit of a greater retail sales volumes,” the fintech reported.
To us this says that South Africans no longer favour a particular store and instead shop for the best value. We expect retailers to be cognisant of this and ramp up their special offers throughout this week.
Keep in mind though that while the inflation hike was minimal, it’s still a hike and with basics now costing more than ever, it may be best to exercise restraint this holiday season.
