Consumers cautious on festive spending

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Shops face relatively subdued Christmas sales this month as a Deloitte survey shows South African consumers lag those in many other countries in their planned spending. Photo: Timothy Bernard.

Major retailers could experience relatively subdued Christmas sales this year as shoppers facing administered price hikes spend carefully, while the festive shopping season will be one day shorter due to many store closures on Sunday for Nelson Mandela’s funeral.

Major retailers and a fast food group have either announced plans to close stores on Sunday or said franchisees might opt to close for the day.

A Deloitte year-end holiday survey showed recently that local shoppers were planning to spread their budget carefully, hunt for bargains and cash in on loyalty programmes this Christmas. The survey forecast South Africans would increase their holiday spending on food, gifts and socialising by 4.7 percent from last year on average.

This is despite consumer confidence levels being at a low and the National Credit Regulator showing that the number of consumers with impaired records increased by 71 000 to 9.7 million during the quarter to September.

The Deloitte survey, which includes 18 European countries, showed that spending on socialising would increase by 8.96 percent while gift purchases would see a 7.18 percent increase. Spending on food and travel was expected to only increase by 3.7 percent and 1.63 percent, respectively.

Leading retailers agreed with the survey, saying that consumers were careful about what they bought and how much they spent on gifts.

Massmart, which owns Makro, DionWired and Cambridge, among others, said consumers were still feeling the pinch, so value for money remained critically important.

Deloitte consumer business industry leader Rodger George said: “Because of high inflation, petrol and food price increases, South African consumers have had to make tough choices with regards to spending during the year. This has caused them to be extra careful about how and where they are going to spend their money for Christmas.”

He said South Africans were going to do more “homework” before shopping with the hope of using their points from loyalty programmes. The survey found that purchasing decisions by 31 percent of consumers would be influenced by loyalty programmes, with the majority of consumers preferring immediate discounts as opposed to delayed loyalty benefits.

George said that with the help of the internet, shoppers would look for specials from different stores. “They will do price comparisons so that when they walk into the store they know what they want.”

He said that unlike last year, when people bought fewer gifts of higher value, this year people were going to go for more gifts but of lower value.

But this has not stopped retailers such as Massmart stocking up on expensive gifts such as PlayStation 4 gaming consoles and big screen television sets. The retailer said gifts such as mini speakers, headphones and coffee machines remained favourites among adults.

Food retailer Shoprite said it had been securing deals since January for traditional Christmas fare, decorative items, toys, gifts and holiday treats.

“Many prices were tied up before the weakening of the exchange rate and multiple energy increases took effect and it thus has a wide range of items available at price ranges to suit everyone’s pocket.”

The retailer has stocked up on a variety of poultry roasts and a large range of confectionery for the festive season, such as Christmas cakes and mince pies.

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