It’s home sweet home for SA consumers
Appliances, furniture and home renovation supplies sell as people invest in their properties
● South Africans may not be spending as much overall as they did last year, due to the economic fallout from Covid-19, but retailers report a general uptick in the sale of lessessential goods such as consumer electronics, appliances, home renovation materials, furniture and gym equipment.
Alec Abraham, a senior equity analyst at Sasfin Wealth, said that from anecdotal evidence this is “pretty much the story that everybody has got these days” and there is a “lot of interest in home renovations goods and gym-ing at home”.
“You are even seeing it internationally, that people are investing more in their homes, in their living spaces, because they are spending more time in their homes.”
He said that when the lockdown was first enforced there was more demand for merchandise such as food and pharmaceuticals, including toiletries, cosmetics and sanitisers.
Food and pharmaceuticals sales are still strong, albeit at lower levels than they were last year, but it is apparent that people are starting to spend on household furniture and appliances, which were initially “down heavily during lockdown”, he said.
The latest retail sales data for June from Stats SA show that the sale of household furniture, appliances and equipment increased 13.4% compared to the same time last year in real terms, he said.
“Whereas if you look at total retail, spend was down 7.5%, so the fact that household and appliances went up 13.4% meant there was spending in that area.
“The other area where we saw a small pick-up was in the hardware, paint and glass sector, which speaks to the renovating of the home and making your living space better because that is where you are spending a lot more time.”
Abraham said overall retail spending seems weaker than the same time last year and “that makes sense because people are under pressure and a lot of people have lost their jobs”.
Mitchell Slape, CEO of Walmart-owned Massmart, said that “for a general merchandising business, what has been encouraging is the trend towards working from home and the trend towards school from home, which have really helped us in terms of everything from office supplies, electronics, furniture — all of these things we’ve seen great uplifts in”.
“Because people haven’t been able to go to their favourite gym and exercise, we’ve seen sporting goods do very well as well,” said Slape.
He was speaking in an interview last week when the JSE-listed owner of Game, Makro and Builders Warehouse released results for the 26 weeks ended June 28.
“We’ve also seen a really good impact in Game and Builders and other businesses. Everything around home décor, making your house nicer, getting your yard and lawn fixed, our sales there have been very strong there as well.”
Slape said the group’s online sales have also “picked up significantly”, growing 95% during the reporting period compared to the same period last year.
“It’s important to remember that for a portion of that we were restricted in terms of being able to execute on e-commerce or
We think for the full year, sales from our website will increase more than 100%
Gerhard Hayes, above Retail CEO at HomeChoice
home deliveries.
“I’m pleased with the growth and we are seeing it across the board in the different categories. What customers are looking for is convenience.”
JSE-listed home shopping retailer HomeChoice International said this week there had been a “systematic improvement” in its fortunes, accelerated by the reopening of its stores and its increased digital sales channels.
Speaking after the release of results for the six months to June, retail CEO at HomeChoice Gerhard Hayes said: “The digital channels increased from 15% contribution to total sales to about a 23.7% [during the period under review]. Sales through our digital channels in the first half increased by 39%. We think for the full year, sales from our website will increase more than 100%.”
Hayes said HomeChoice, whose clientele consists mostly of women earning on average about R10,000 a month, said that luckily for the group “about 60% of our business” was able to continue during the initial hard lockdown as homeware such as bedding and blankets was regarded, in terms of the published government regulations, as essential goods.
“We saw South Africans up until June buying a lot of bedding, blankets and small appliances.
“And subsequently after the end of June, let’s say for the last eight weeks or so, we saw a lot of growth in small and large appliances and consumer electronics. In terms of small appliances, a lot of kettles, toasters and a lot of heaters thanks to some excellent work by our supply chain and merchandising teams securing stock.”
Hayes said the company’s business overall had been resilient due to contingency plans it put in place as SA entered lockdown at the end of March.
“Our 10 stores were closed for five to six weeks and head office was closed.
“We bought more than a thousand laptops to make sure people were able to work from home.”
But the impact of Covid-19 and the economic knock-on effect was still felt, with HomeChoice reporting that its operating profit declined 46.7% to R184m, on lower sales and “prudent debtor provisions”.
Hayes said the group increased its baddebt provision 38% during the six months to June to provide for any deterioration in bad debt.
But Hayes said things are looking up for the group because while “for the first six months our retail sales were down 10%, for July and August we are slightly positive.”