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Can Black Friday and Christmas save retailers in 2019?

Shopkeepers will be hoping for a lot more holiday shopping than in the past.
Thanks to Black Friday, November is becoming more important than the December holidays for retailers. Image: Neil McCartney, The Citizen

A visit to any shopping centre shows that retailers are gearing up for the end of November’s Black Friday sales bonanza as well as Christmas, stacking boxes high on their shelves and four-deep in the aisles. Shoppers literally need to be careful not to crash their trolleys into pyramids of cheap drones, expensive radio-controlled Jeeps and loud Bluetooth speakers.

It seems that every shop is more aggressive than the next in pushing products out the door this year. The extra effort looks necessary if the latest statistics on retail sales from Statistics SA are anything to go by.

The statistical report shows that retail sales were quite subdued during the first nine months of this year, growing at only 1.3% in constant 2015 prices compared with the first nine months of 2018. Results from listed retailers spanning the first two or three quarters of 2019 have indicated as much.

Tough times for retailers

Shoprite Group, the largest retailer in SA with its large Shoprite and Checkers chains, reported a few months ago that the year to June was difficult due to tough macroeconomic conditions. The group reported growth of only 3.6% in turnover to R150.4 billion, compared with R145.1 billion in the previous year, while also reporting lower profit margins.

It is important to note that the 3.6% growth figure reflects growth at current prices, meaning that a bit of inflation rather than real sales growth helped to push the figure higher.

A trading update from Mr Price a few weeks ago contained the same message. It noted that retail sales across all its brands – including Mr Price, Mr Price Home and Mr Price Sport – increased by only 0.5% in the four months from April to July. Excluding new store openings and expansion in floor space, comparative store sales declined 2.5% compared with the same period in 2018.

Read: Black Friday: Buying all the things you didn’t know you needed

Stats SA’s figures show very little growth in sales every month since the beginning of the year, compared with the corresponding months in 2018; April was the last month that showed ‘decent’ sales when Easter holiday spending helped to push growth to 2.7% in real terms.

Over the last three months – the quarter to September – only sales of household furniture, appliances and equipment; and textile, clothing and footwear, increased at a slightly higher rate: 2.7% and 2.3% respectively.

Stats SA’s category for other retailers improved sales by 4.2% in constant prices in the quarter, but it is difficult to interpret the figure as the category is very wide. For instance, it includes the large and growing sales by retailers in sporting goods, as well as retail sales not in traditional stores. Thus, the important and increasing online shopping is dumped into the ‘other’ category.

Stats SA explains that the statisticians use a standard classification for monthly reports, but it gives a more detailed breakdown in its more comprehensive retail trade industry report that is published every three years.

Stats SA says the figures for sales outside of stores include online purchases if the sales were from retailers that only have online stores. However, sales by retailers than have both internet and brick-and-mortar shops are included in the figures of that retailer in its relevant category.

Black Friday

The statistics of the last couple of years show how important the last few months of a year are for retail sales. The months of October, November and December account for around 29% of annual sales.

The figures also indicate that November and its Black Friday shopping spree is becoming more important than even the December holiday sales.

November sales have grown by 20% in constant prices since 2013, compared with only 11% growth in December over the same period.

Black Friday is effectively stealing sales from Christmas.

Retail sales increased by 2.8% in November 2018 compared with 2017, while December sales decreased by 1.7% last year. In 2017, which was a good retail year, November sales grew 8.4% in constant prices while December sales increased by a lower 5.6%, according to the Stats SA figures.

It follows that Black Friday will probably become even more important, with retailers putting more effort into it.

Retailers are responding to the opportunity by advertising discounts for longer than just that Friday. While some try to stretch it to a week, Pick n Pay, for example, tries to stretch the day to a full month, advertising discounts for the whole of Black November in its online store.

Listen to Nompu Siziba’s interview with Hardi Swart of Autus Private Clients on SAfm Market Update with Moneyweb:

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NO !! As someone who teaches financial education, most people do not pay their credit cards in full every month. This generally means they continue to use them and continue to dig a larger, deeper hole. The smart ones will be frugal this holiday season. For the rest, the pain will follow when interest rates rise quickly once we hit the “junk” button. Dr. Debt

This is nothing but political protection money because they have no backbone to stand up to this kind of extortion.

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