Going cheap

Truworths, Woolworths, Stuttafords and Foschini have already held preseason sales, while Edgars has a permanent rack of items on sale. Shoprite, Pick n Pay and Massmart stores Game and Makro will not have pre-Christmas sales. “But we will ensure that our Christmas merchandise is keenly priced,” says Massmart spokesman Brian Leroni.

In this way retailers hope to benefit from a consumer mind-set that is firmly focused on value.

According to Leroni, bundled merchandise, like drill-and-grinder sets, is doing well at Builders Warehouse. “It may be that one bundle is used for two gifts or to purchase a needed piece of equipment while using the added value item as a gift.” Camping equipment is also doing well, possibly because consumers view camping as a cost-effective holiday option, he says.

Those that aren't camping appear to be staying at home and Pick n Pay CEO Nick Badminton expects a moderately good Christmas for this reason. But, he says, the retailer expects shopping to gain momentum only at the end of this week.

SA Breweries is also hoping that even if people do stay at home, the hot weather and lunchtime socialising will drive sales. “Our volumes in our peak trading months like November and December exceed our slowest months by over 50%,” says SAB communications manager Janine van Stolk.

Within the New Clicks group, Clicks has seen a surge in the sale of Christmas decorations; at Musica, sales of the Mamma Mia DVD suggest it will be the best-selling DVD of all time, and at the Body Shop, 40% of its Christmas gifting range has been sold.

Retailers are also likely to emphasise deals for children, as adults are expected to cut back on gifts to one another to save money.

Unlike last year, most retailers have gone into the Christmas period under stocked, says Sanlam Investment Management equity analyst Andrew Kingston. “The slowdown has been well telegraphed and retailers are prepared for discerning shoppers.”

Brait chief economist Colen Garrow is not optimistic about Christmas spending. “The fuel price is coming down, debt levels are declining and we are hoping for a rate cut this week.” It is good news but it's probably too late to boost Christmas sales, he says. “There is concern about job security, the elections and the interest rate. In that climate people sit on their cash. It will take further persuasion from the retailers to entice people to shop.”

With the retail sector technically in a recession (after two consecutive quarters of negative growth) a holiday spending slump does not bode well for stores, which often rely on the festive season for the bulk of sales and profits.

Source: Financial Mail

Published courtesy of