South Africans are still spending, though differently - and increasingly online
Consumer goods, as a sector, came under extreme pressure during the Covid-19 lockdown. In an economy that has shed 2.2 million jobs in the second quarter of 2020, it remains under incredible duress, perhaps more so than at any time in the past century.
“It’s interesting times indeed,” says Isana Cordier, Head of Consumer Goods and Services at Absa Corporate and Investment Banking. “Looking at the data, people are still spending, they’re just spending differently.”
Consumer spending is holding up but changing
Predictably, grocery “basket sizes” have grown while shop visits have fallen.
Major super-regional shopping malls across South Africa, particularly those exposed to tourism such as the V&A Waterfront and Canal Walk in Cape Town, are still well down on normal levels. Some smaller, less urban malls are up on pre-Covid levels, says Anthony Thunstrӧm, CEO at The Foschini Group (TFG). “You almost think there’s no coronavirus!”
“Our bottom line is under pressure. Our margins are under pressure. But South Africa has a resilient economy and we’ve seen an uptake in the past few months,” says Bongiwe Ntuli, Chief Financial Officer at TFG.
“Our product is built on the premise of sociability, so it was incredibly challenging,” says SAB Marketing Director Vaughn Croeser.
Since the resumption of trading, SAB has seen good sales volumes, but also shifts in consumer behaviour, particularly towards the value sector, which remains robust, and in-home consumption. This trend is unlikely to continue beyond the short-term, says Croeser.
Dawn of digital adoption
Ecommerce made up about 1% of TFG’s turnover at the start of its last financial year. It’s currently at between 5% and 6%. “It moved us forward about three years,” says Thunstrӧm.
“I don’t see online sales going back,” says Ntuli. “I see it escalating further.”
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