Retail data confirms Black Friday blues
SA retail sales fell at a faster-than-expected pace in November, underscoring the pressure Covid-19 is putting on consumers and confirming that Black Friday failed to lure shoppers to stores in significant numbers. Economists warned on Thursday that subdued confidence and the recent surge in Covid-19 infections pointed to a difficult start to the year for the sector.
SA retail sales fell at a fasterthan-expected pace in November, underscoring the pressure Covid-19 is putting on consumers and confirming that Black Friday failed to lure shoppers to stores in significant numbers.
A number of retailers had already reported that Black Friday sales were disappointing, with economists warning on Thursday that subdued confidence and the recent surge in infections pointed to a difficult start to the year for the sector.
SA retail sales declined 4% year on year in November, from a 2.3% fall in October, Stats SA said — the worst performance since August 2020 and worse than the 2.6% consensus fall expected by seven economists polled by Bloomberg.
Pressure was felt most by retailers in Stats SA’s “all other” category in November, which includes stores selling items such as stationery, sporting goods or second-hand goods. This category saw a 26.1% yearon-year decline, contributing 3.2 percentage points of decline to the headline figure.
Retailers in textiles, clothing, footwear and leather goods saw a 5.6% year-on-year decline, contributing negative 1.1 percentage points, while retailers in hardware, paint and glass saw a 14% year-on-year rise in sales — positively contributing 1.1 percentage points to the headline figure.
THIS WEAKNESS IS LIKELY TO INTENSIFY IN THE FIRST TWO MONTHS OF 2021 GIVEN ONGOING LOCKDOWN RESTRICTIONS
A 2.5% year-on-year decline for general dealers — nonspecialised stores that mainly sell food, beverages and tobacco
— was surprising, noted Nedbank Group economists Nicky Weimar and Johannes Khosa.
General dealers are usually the main beneficiaries of Black Friday specials given that they offer bulk sales, the economists said, noting that the data showed the contribution of consumer spending to GDP in the last quarter of 2020 is likely to have been less than initially expected.
Overall, Covid-19 continues to have a devastating effect on the retail sector in SA, said chief economist at Stanlib Kevin Lings, noting that its recovery was likely to be further constrained.
“Unfortunately, this weakness is likely to intensify in the first two months of 2021 given ongoing lockdown restrictions, an expected increase in unemployment, lower salary adjustments, renewed loadshedding and less fiscal stimulus,” Lings said.
A number of retailers have recently released updates to the market outlining softer sales during the Black Friday period as the pandemic weighed on consumer spending and slowed foot traffic in malls.
Earlier on Thursday, Massmart, the owner of Makro and Game, told shareholders that in line with what has been seen throughout the sector “sales over the November 2020 Black Friday trading period were softer than those seen in 2019”.
But its extension of Black Friday promotions throughout the month did mitigate the effect of softer Black Friday weekend sales to some extent.
Fashion retailer TFG also reported recently that its November turnover was down 10.2% on a like-for-like basis, as it had to ensure compliance with several Covid-19 requirements, including the restriction on the number of customers in stores and curtailing operational hours. The decline did, however, come against a record Black Friday in 2019, TFG said.