South African retail sales fell more than expected in November, despite deeper Black Friday discounts and month-long promotions, as sales of ‘other’ items like jewellery and clothes contracted.
The latest data points to lingering weakness in the South African economy from the coronavirus pandemic with consumers still feeling the pressure financially, confounding retailers’ efforts to lift profits and reward shareholders through dividends.
It also hampers President Cyril Ramaphosa’s efforts to boost growth when South Africa’s already overblown budget has been hamstrung by the virus.
Retail sales fell 4% year on year in November following a revised 2.3% contraction in October, data from Statistics South Africa showed on Thursday.
That was worse than a Reuters forecast for a 2.5% drop.
Sales in the ‘all other retailers’ category, which includes jewellery, was the main drag as it continued to contract, declining by 26.1%, followed by textiles, clothing and footwear, down 5.6% and food, beverages and tobacco, which fell 2.6%.
On a month-on-month basis sales were up 1.8%, the statistics agency said.
Retailers extended their Black Friday sales throughout November in an attempt to prevent crowds and also to make up for lost revenue during a tough year.
Earlier on Thursday, Massmart, majority-owned by Walmart Inc, posted lower sales for the fourth quarter, blaming reduced foot traffic, softer Black Friday trade and coronavirus curbs.
Nedbank economists Nicky Weimar and Johannes Khosa said the retail sales data suggests that the contribution of consumer spending to gross domestic product (GDP) in the last quarter of 2020 is likely to be less than initially expected as consumer confidence remained depressed.
Retail and trade accounts for around 15% of GDP, the third largest sector, after finance and government services.