LISTEN: November sales volumes buoyed by Black Friday deals
JOHANNESBURG – Retail trade sales accelerated to 2.6 percent year on year in November, following September’s marginal 0.4 percent year-on-year lift, with the result notably above market expectations, according to Bloomberg analysts, of 0.7 percent year on year.
Market commentators noted that the Black Friday retail frenzy, was primarily responsible for the uptick, with BankservAfrica reporting a 36 percent year-on-year increase in the total number of Black Friday transactions processed in-store and online.
FNB analysts noted that a disaggregation of the data showed that volumes increased across all categories, except pharmaceuticals, cosmetic and toiletries. The Food and beverages category recorded the biggest increase in volume sales at 6.2 percent year on year, followed by General dealers at 3.2 percent and household furniture and appliance at 3.2 percent.
The seasonally adjusted volumes increased by 3.1 percent month on month in November, from 0.1 percent, revised from a decline of 0.2 percent, in the previous month.
“We attribute this welcome increase to the Black Friday discounts, consistent with our view that households have become more price-sensitive and are more inclined to buy goods on special. Furthermore, it is possible that consumers used the opportunity to frontload their customary Christmas shopping, which could suggest relatively subdued shopping activity in December,” said FNB.
Investec economist Lara Hodes noted that retail price inflation remains notably below CPI inflation, continuing to reflect the subdued nature of the domestic economy, where retailers were compelled to compress margins in the face of lackluster demand.
“Lackluster confidence, exacerbated by elevated uncertainty around the country’s electricity supply, coupled with muted household credit growth, a weak labour market and elevated debt levels continue to impede the consumer’s ability and willingness to spend.
As such, any significant and sustained pick-up in household consumption expenditure in the near-term is unlikely,” said Hodes.
Looking ahead, FNB said while households’ appetite for credit remained reasonably strong, the persistent pressures on disposable income – via a weak labour market and higher taxes – and rapidly weakening credit scores meant a narrowing scope for consumers to take up more debt. “These factors, combined with the deterioration in consumer sentiment, suggest a relatively tepid medium- to longer-term household consumption prognosis.”
More immediately, however, retail sales were expected to have moderately picked up during the festive season as consumers took advantage of discounted pricing.