Penny-pinchers give shops a tight Christmas

This year, with consumers buckling under the financial strain of the recession, South Africans spent their hard-earned money on food and alcohol rather than big-ticket items.

Massmart CEO Grant Pattison said that in his group's stores - Game, Dion and Makro - liquor and basic foods had sold well, but splurge items such as Sony PlayStations and Nintendo Wiis had not flown off the shelves. "They're not doing badly but not growing at the same rate as last year."

Recession more entrenched

Massmart, the third-largest distributor of consumer goods in Africa, has seen more spending on home improvements - such as paint and power tools - than a year ago, showing that people are staying at home rather than going on holiday.

Pattison said this recession was different from tough economic times that people had experienced before.

Historically, despite weak November sales, December trade would be good. This year, however, "November and December were similar. The recession was more entrenched this time."

Shoprite marketing director Brian Weyers said people had traded down from last Christmas.

Shoprite's best-selling toys were under R40, while toys in the more up-market Checkers sold best between the R100 and R200 range.

Retailers also believe that the week after Christmas was becoming a much better trading period.

Weyers said more people were giving gift vouchers as presents, which would be cashed in after Christmas.

Pick n Pay CEO Nick Badminton said another major trend was for people to stay, eat and entertain at home.

Spending spree a ‘huge mistake'

For Pick n Pay, the week's bestsellers included cool drinks, turkeys and gammon. "We have seen an increase in the number of customers overall but the basket size is smaller," Badminton added.

However, while South Africans scaled down their expectations, debt counsellors warned that far too much was being spent on Christmas festivities.

Luke Hirst, managing director of debt counselling company Debtbusters, said: "People are very concerned about their finances, but they refuse to forego their spending over the Christmas season.

"Thinking that one last spree for the year is okay is a huge mistake."

It is estimated that about 40% of South Africa's 18 million consumers are experiencing debt problems.

At the end of last year, just under 1000 people were being counselled by Debtbusters, compared to the current 3000.

Colin Brazendale, a debt consultant for Debt Review Solutions, said South Africans were taking out new debt to pay their old debts.

"Almost 90% of our customers have cars and houses. They normally try to keep up with the house payments and take out money from credit cards to pay their bonds."

Source: Sunday Times

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