Five retail categories that will lead the sector’s recovery in 2021
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StatsSA’s latest figures show retail trade falling 3.5 percent year-on-year from 2019 to 2020, continuing a 10-month downward spiral.
However, South African retailers are starting to show signs of adapting to the needs of the changing market.
Dov Girnun, chief executive of Merchant Capital, said that although the sector has yet to recover from a combination of the country’s Covid-19 measures and reduced consumer spending power, the company’s collection data suggests the early signs of recovery in several key categories.
“We’re starting to see South Africa’s retail sector adapting to the reality of new customer preferences, lifestyle changes, the impacts of Covid-19 and technological developments. We believe the retail sector is on the mend, and will see greater recovery throughout 2021,” Girnun said.
Figures from Merchant Capital show five categories that could drive the retail sector’s recovery this year
The fuel industry has seen significant changes in fuel consumption with more people working from home. But fuel retailers have found new ways of attracting revenue, including offering pharmacy goods, wi-fi access and electric vehicle charge stations at their forecourts.
“Fuel retailers are also using technology to innovate: Refuel is an app-based mobile business which brings fuel to you, for example,” Girnun said.
Hair and beauty
StatsSA’s figures showed pharmaceuticals, medical goods, cosmetics and toiletries reporting a 3.3 percent year-on-year increase in December.
Girnun said the focus of the industry has been redirected to self-care and wellness, resulting in a spike in these purchases. The hair and beauty industry is also embracing technology to offer experiences such as online masterclasses.
Businesses that help car owners maintain their assets are booming. One example of this is the recent surge in the number of car wash franchises.
The online retail industry grew by 40 percent during the Covid-19 lockdowns. “As a result, clothing retailers have moved their focus online, in addition to their brick-and-mortar stores,” said Girnun.
Building and hardware
Hardware, paint and glass grew by 8 percent year-on-year in December, with home-bound consumers spending more on home improvement through DIY and household goods.
What has their recovery looked like?
Merchant Capital’s merchants work on a ‘repay as you trade’ system, where loan repayments are collected as a percentage of each transaction. The data below indicates levels of collections across the five industries through each stage of the lockdown. This clearly shows the implications of reduced turnover, as well as the impact of payment holidays and lockdown relaxations.
BUSINESS REPORT ONLINE