Festive season spending shows careful but increased spending

According to Luüs, growth in retail sales appeared to be tapering off during 2011, from more than 7% year-on-year in January, to only 2.5% in June. "Figures for the past two months have surprised on the upside, so in real terms, signs are promising that December sales will still show a rise on last festive season, even after taking into account inflation," says Luüs.

He forecasts this growth at between 2% and 4% year-on-year in real terms, which equates to between 8% and 11% in nominal terms.

Driving the growth in festive buying, he points to interest rates remaining at their lowest levels in more than 30 years; employment levels are showing a moderate rise and average real wages in some sectors are experiencing significant upward adjustments owing to labour actions in 2011.

"Although consumers' debt levels remain high, these have in fact edged downwards over the past year. But consumers remain mindful of the weak job market prospects and the risks facing the economy in 2012," he adds.

Kippen is slightly more positive, pitching growth at between 5% and 7%. He notes that low consumer confidence, international economic turmoil, job losses and continuing high unemployment levels are all taking a toll on retail growth.

Credit is king

However, there is no doubt that cash is no longer king this festive season - credit is.

"The increased cost of living has negatively affected monthly budgets and retailers offering terms and accounts always benefit during trying times," says Kippen.

Luüs points out that those retailers providing credit facilities and attractive payment terms have an advantage this festive season. However, he notes that SA banks' credit growth remains weak in view of strict lending criteria, which may aid cash purchases where in-store credit facilities are not available.

The festive shopping frenzy is expected to continue its trend to peak later and later with the 10 days before Christmas anticipated to be a flurry of purchasing. Retailers are going to be placed under massive pressure to kick in to top gear to maximise this condensed festive shopping peak, which will need absolute slick efficiency.

With Christmas Day falling on a Sunday in 2011, Friday 23 and Saturday 24 December are likely to be a colossal shopping shakeup - keeping tills ringing.

For shopping centres, the festive recipe of a one-stop shopping experience offering a wide selection remains the greatest consumer draw-card - standing regional and super-regional centres in the best position to cash in on the festive shopping flurry.

Comparative shopping key

"In addition to the value of convenience, shoppers are looking for value for money - they are both extremely price and quality conscious and want to get the most from their hard-earned money," says SACSC GM, Amanda Stops.

Kippen explains that comparative shopping is an increasingly common occurrence: "consumers have changed and mind-sets altered, with spending habits and lifestyles adjusting in tandem. The majority are becoming more spendthrift. The recession has created this change which is also being powered by the digital age where consumers have become more active, realising they have considerable power now."

With this in mind, Stops points out that special offers and new products are tools, which retailers should be using generously this festive season.

The predicted festive season's big gift is the tablet computer. "Electronics and gadgets are always on top of Christmas wish-lists and this year the tablet is set to be the most coveted gift," says Stops. However, it will not be the only performer. Children's wear, women's shoes and accessories are all top trading retail categories.

To get the best out of the festive season for everyone, Luüs offers the following tips: retailers must ensure that their credit referencing and physical security must be sharp and shoppers should be careful with their budgets and avoid over-extending.