By Nkuli Bogopa
To ensure a sustainable lifeline for retail businesses, they require both an online and an offline presence. A good balance between these two is essential.
The half-year results of some listed funds point to the encouraging fact that in South Africa, the rural and township retail sector has shown the greatest resilience, and even a better performance when benchmarked against similar countries like Spain, where the latest study revealed that consumers there prefer to come in-store rather than purchase online.
As can been seen from the June figures, there has been a definite decline. However, this can be expected with the closure of food and beverage outlets and gyms. Looking at year-on-year for June, only regional centres show an increase from last year.
Compared to April 2020, foot traffic increased in community centres by 51.2%, 68.2% in small regional centres and 111.7% in regional centres. This can be expected, as only essential services were open during hard lockdown.
Basket spend has increased, but this can be attributed to rising prices. Food prices continue to rocket. Sunflower cooking oil now costs customers 30.3% more than a year ago, while white sugar has increased by 11.5%. Global food prices have also recorded their fastest growth rate in more than a decade.
Online retail in South Africa has more than doubled over the last two years. It increased by 66% in 2020 at a value of R30.2 billion, compared to R14.1bn in 2018. Currently, online retail represents 2.8% of total retail sales, up from 1.4% in 2018.
During hard lockdown, consumer confidence dropped. However, we have seen an increase in Q2 2021 to a six-year high. The new restrictions may lead to a similar drop in consumer confidence as last year, albeit not to the same extent.
Consumers remain under pressure, and will remain so due to the UIF-Covid19 Ters relief programme coming to an end, rising fuel and electricity prices, food inflation and below-inflation adjustments to social grants. This will continue to put household finances of not only low-income consumers but consumers in general under significant pressure.
Overall, trading densities decreased by around -6.4% after the outbreak of the pandemic. The highest drop in trading density is in entertainment (-56.1%), followed by services (-30.6%), with only homeware, furniture and interior showing positive growth (7.0%).
Looking at the secondary retail categories, pharmacies and personal care increased by 4.8% and groceries/supermarkets by 5.1%.
Nkuli Bogopa is a group chief operating officer: property management at Broll Group.
PERSONAL FINANCE