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In many ways, the retail sales figures from Statistics SA (StatsSA) are reflecting the new dynamics of living with loadshedding in a post-pandemic situation in South Africa. Loadshedding has been conducted at a high intensity every day bar two so far in 2023 and one of the consequences is that home food preparation often becomes a casualty. Many families are dispensing with preparing food at home, preferring to buy takeaway. This might not necessarily be healthy but at least it will be hot and available on demand. Anything else will be subject to the vagaries of loadshedding schedules. And many households don’t want to keep large amounts of food in their fridges and freezers, in case loadshedding lasts long than schedules, resulting in food going bad.
The two sub-categories of food sales in the StatsSA figures-General Dealers and Food, Beverages & Tobacco in specialized stores-both exhibited negative sales growth in March, with General Dealers going backwards by 1.9% and the other food retail category by 6.6%. Little wonder that the supermarket chains are getting rattled, seeing their customers desert them in favour of buying fast food, while at the same time the supermarkets are having to fork out vast amount of money every month for their diesel generators.
While loadshedding continues at these very high levels, consumers are likely to continue using takeaways. Other options available to consumers is to use gas hotplates and cook on those during loadshedding, but LPG isn’t always available and has becomes expensive I recent times. Alternatively, for those with deep pockets, going off-grid completely via solar panels and backup batteries is an option but this is still an expensive exercise. So in the meantime, expect to see food sales remain relatively subdued.
At the other end of the spectrum, sales of clothing, footwear, textiles & leather (CFTL) remain strong and have been strong ever since Covid restrictions were relaxed in 2020, following the strict lockdown of clothing stores. The pent-up demand that was so evident as people were allowed back in clothing stores again has largely carried on unabated since then. For March, year on year growth in CFTL sales growth was 6.3%, following 5.6% growth (revised) in February. This strong growth is reflected in the sales of all the JSE-listed clothing retailers, especially those that have the ability to sell on credit. There are no signs of any weakness in the strong trend of CFTL sales.
Sales of pharmaceuticals and medical goods, cosmetics and toiletries continue to disappoint, with March sales being 3.2% lower than a year earlier, following a 3.1% decline in February. In fact for at least the past six months, sales from this category have been negative.
Sales from the hardware, paint and glass category were again negative in March, printing at -3.9%, following an 8.2% year on year decline in February. While still negative, this is the smallest decline in many months and may be indicating a slowdown in the rate of decline in this category. This category is effectively a proxy for DIY/Home Improvement retailers and JSE-listed companied such as Cashbuild in this sector have had a torrid time in the past two years. In the depths of the pandemic, when the economy was in lockdown, home improvement retailers did well from the so-called “homebody economy” as they spent money on their homes to make them more comfortable and efficient for working from home. But as the pandemic has receded and people have drifted back to the office, so the home improvement retailers have suffered.
Household furniture, appliances & equipment is the ultimate discretionary category, with big-ticket items such as furniture, electronic goods and appliances being sold. Intuitively one would expect this category to be struggling in a high interest rate/high unemployment rate environment and while there have been some negative prints recently, the sector as held up remarkably well. This is probably due to greater credit availability for those consumers who can afford it.