According to the NielsenIQ State of the Retail Nation report, in the face of cost pressures, consumers are not buying more but are paying more for less. This is reflected by total basket value sales (excluding liquor & tobacco) being up by 7.6% but with a very sluggish 1.1% increase in the number of units sold over the same period. The report shows that local consumers are shopping less frequently and at fewer retailers, but when in- store, they spend more per trip.
THE TRENDS
Given these stats, we spoke to Michael Clampett, asset and property executive at Attacq, about emerging trends and how the retail sector is faring. He is optimistic about the industry’s trajectory, saying, “Over the last few months, we’ve seen the people visiting our shopping centres increase. It is not yet at pre-pandemic levels, but it’s sitting at around 85% to 90% and getting closer to reaching those levels. However, spending is easily suppressing pre-covid levels. Currently, turnover is about 15% to 25% higher than pre-pandemic levels,” says Clampett. “Spending has topped 2019 levels for the last twelve reporting months in all our seven retail centres. This is a very positive sign as it shows consistent recovery of the sector.”
StatsSA says retail trade sales increased by 3,3% in the third quarter of 2022 compared with the third quarter of 2021. The most significant positive contributors to this increase were: general dealers and retailers in textiles, clothing, footwear and leather goods. Attacq’s development portfolio is
mainly in Gauteng, with exposure to the Western Cape and North West provinces. The company owns Mall of Africa, South Africa’s largest shopping mall ever built in a single phase with over 130 000 m2 of retail space and over 300 shops. Other retail assets include Lynnwood Bridge and Glenfair Boulevard in Pretoria, Garden Route Mall in George, MooiRivier Mall in Potchefstroom, Eikestad Mall in Stellenbosch and Waterfall Corner in Waterfall City.
One of the effects of Covid-19 lockdowns was that many retailers, restaurants and other businesses abandoned ship as profits dwindled. This led to some vacancies in some retail centres across the country. However, this year, the tide has turned. “Most certainly, in 2020, we faced a scenario where we had vacancies as business owners struggled to keep their heads above water. This is not always an unhealthy scenario in the retail space as it gives us the natural opportunity to bring in new tenants, variety and a new mix of products. As things stand, all our malls are in excellent condition with new brands and upgraded stores,” he says. Speaking of the health of retailers in the centres, Clampett says, surprisingly, they are much healthier despite consumers not necessarily being in their best financial positions at the moment.
According to Statistics South Africa, finance, real estate, and business services increased by 1,9% in the third quarter, contributing to GDP growth. Increased economic activity was reported for financial intermediation, insurance and pension funding, auxiliary activities, real estate activities and other business services.
Clampett believes there is still room for retail growth in the country, particularly with the smaller centres that focus on convenience and community. “There is a need for these centres, particularly in some of the more rural parts of the country,” he says.
BLACK FRIDAY
A good case to prove the return to in-store shopping is Black Friday noted recently. NielsenIQ reports that in-store shopping came back during Black Friday, with 80% of surveyed respondents having made some in-store purchases. Interestingly, the tech- savvy younger age groups made their way to the stores in more significant numbers. “This was more prominent with younger shoppers, as 40% of shoppers 55-64 and 56% of shoppers 65+ did all their Black Friday shopping online,” says NielsenIQ.
Clampett echoes this saying; shoppers came in numbers on Black Friday weekend. “At Mall of Africa, we had 14% more people on Friday, Saturday and Sunday than last year, which is quite a significant increase in visitors,” he says.
Black Friday shoppers took advantage of deal prices on traditional gifting categories (more so than early holiday deal days). Yet, groceries and everyday essentials still had a strong presence on shopping lists. On the other hand, traditional gifting items dominated shopping carts during Cyber Monday. “People are spending less on homeware, but there’s increased spending in fashion and dining,” Clampett says.
NielsenIQ reports increased price sensitivity across multiple categories, with disloyalty growing regarding brand preference versus the lowest available price.
“South Africa is already one of the most price-sensitive countries in the world so it will be interesting to evaluate the role of promotions, for example, within this new shopping environment. Unfortunately, the added risk in South Africa is that many of the LSM groups have already cut back so much that they have no more room to manoeuvre. It will therefore be interesting to see the cost coping strategies shoppers employ to counter these constraints,” says Ged Nooy, NielsenIQ South Africa Managing Director. “There is also clear evidence that consumers are becoming far more circumspect about what constitutes a ‘must have’ in their shopping baskets with fresh milk, Vienna sausages, breakfast cereals, margarine, cheese, soaps, skincare, and deodorant all on the chopping block.”
With the number of people making their way to the stores, one concern for shoppers is parking, and Clampett says this is something Attacq is very conscious of. Three of Attacq’s centres, Garden Route Mall, Glenfair Boulevard and MooiRivier Mall, do not have booms for convenience.
“All our shopping centres there’s enough parking and where we have boomed access we have various payment options by using payment portals such as Admit, Zapper or SnapScan. In some cases, we change parking tariffs for a certain period, so we try to make it as easy as possible to access our centres,” he says.
