Retailers had a meh Christmas and unhappy New Year
Consumers were understandably shnoep over the festive season, and it shows in Shoprite and Massmart
South Africans love Christmas. Previously, they would have just shrugged off whatever bills came their way by maxing out their credit cards so they could enjoy the festive season.
The past year was different. It said a lot about the state of the economy when Shoprite reported that school supplies had outsold toys for the first time in December.
It showed that bare bank accounts forced many parents to make some hard decisions. Do they treat their children or do they prepare for the new school year?
A lot has been written about how the rise in the VAT rate, an increase in interest rates, below inflation wage hikes as well a higher fuel price, have conspired against consumers. The downturn has been more chronic than that.
The results coming from general goods retailer Massmart reflected this, with sales in steady decline for the last few reporting periods.
Massmart is in a sense a bellwether for the state of the economy because its models of selling a high volume of goods at low margins made it very sensitive to whether consumers were buying fewer goods, or were not willing to pay more for some products.
Retail analysts blame the government’s inability to accelerate economic growth in any meaningful way for the difficulty consumers and retailers are facing.
Massmart and other retailers have done their bit to control costs but there is only so much they can do if consumers are walking through their stores with empty pockets.