South African retailers are feeling the pinch due to Covid-19 restrictions after reporting subdued sales and lowered foot traffic at malls during the festive season. Picture: Motshwari Mofokeng/African News Agency (ANA)
South African retailers are feeling the pinch due to Covid-19 restrictions after reporting subdued sales and lowered foot traffic at malls during the festive season. Picture: Motshwari Mofokeng/African News Agency (ANA)

Covid-19, spending cuts hit sales

By Dineo Faku Time of article published Jan 24, 2021

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JOHANNESBURG - SOUTH African retailers are feeling the pinch due to Covid-19 restrictions after reporting subdued sales and lowered foot traffic at malls during the festive season.

Massmart and Truworths recorded the steepest declines in sales during December, while Mr Price managed to grow market share and The Foschini Group (TFG) reported a turnover surge.

Massmart owners of Makro and Builders Warehouse, recorded a 4 percent sales decline for the fourth quarter to R25.6 billion.

The group said sales and foot traffic had remained muted in December, albeit with stronger sales performance in home improvement and DIY categories.

Massmart said its total sales fell 7.7 percent to R86.5bn, compared to the previous year.

The Covid-19 pandemic restrictions have added further economic uncertainty for cash consumers who have lost their incomes and struggle with debt.

Portfolio manager at Johannesburg-based Cratos Wealth, Ron Kiplin, said the Covid-19 pandemic was the biggest contributor to lower sales during the festive season.

“A lot of people did not go shopping during the extended Black Friday period. Others did their Christmas shopping prior to December,” said Kiplin.

Fashion retailer Truworths said its main markets – South Africa and the UK – continued to be affected by the pandemic as it reported a 8.5 percent decline in retail sales for the 26-week period ended December 27 to R9.7bn.

Truworths, whose South African stores were allowed to reopen in May, said consumer spending remained subdued in the wake of the ongoing economic crisis resulting from the pandemic and generally depressed economic conditions.

It said UK trading had been exceptionally challenging amid Brexit uncertainty, with the group’s stores having to close from November 5 to December 2 except for “click & collect” orders, as all non-essential retail activity was suspended in an attempt to curb the spread of the virus.

However Mr Price on Friday reported its market share had grown by 230 basis points in October and November marking the highest on record since the reinstatement of the Retailers’ Liaison Committee back data to January 2017, with gains consecutively for the last six months.

The group said that during the 13 weeks ended December 2020 it had recorded a 5 percent growth in retail sales and other income to R7.8bn over the corresponding period in the previous year.

BUSINESS REPORT

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