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Clothing and homeware slumps

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Even as ecommerce boomed in South Africa during the Covid-19 pandemic, sales of clothing and homewares slumped.

According to the latest Retail Trends Report released by the Retailers’ Liaison Committee (RLC) last week, retail market sales in these categories were down 21% year-onyear for the period March to September, as retailers and consumers were impacted by lockdown restrictions and a contracting economy. However, the slump was largely due to the fall in clothing sales.

“With consumers spending more time at home, they are devoting a larger share of their wallet to home-related purchases, particularly appliances, furniture, accessories and décor,” the RLC found. “Homeware sales grew between 11% and 25% year-on-year from June.”

The report concludes that customers were spending less on formalwear, with a clear shift towards casualwear and essential wear.

“Since June 2020 when stores re-opened fully, the market contracted by 9%, every month, compared to the same period last year.   The Kids & Baby category sold the most in Rands and achieved the highest growth of 48% in May 2020, which speaks to the pent up demand post Lockdown Level 5.”

RLC members include the major clothing and homeware retailers in South Africa, such as Woolworths, Truworths, TFG, Pepkor and Mr Price, international retailers H&M and Cotton On, and online retailers Takealot and Superbalist. In total, 16 retail groups participate, spanning 69 retail brands across South Africa and sub-Saharan Africa. 

The RLC industry report tracks several categories within clothing, footwear, accessories and homeware.

Shane Butlion, chairman of the RLC,says trading has been subdued since lockdown began in March and, while there are some early signs of recovery in certain categories, the market has not yet returned to pre-lockdown turnover levels.

“Sales of clothing and homeware declined substantially in March 2020 as purchase shifted towards food items just before the lockdown. Retail sales in our measured market fell 96% year-on-year in April, with very limited sales in a few categories deemed essential by the lockdown regulations. 

“With the easing of retail operating restrictions in May, the market saw a recovery, with year-on-year growth of 14%, primarily driven by Kids and Baby (up 48%), Women’s Intimate Wear (up 29%) and Menswear (up 14%).”

Every other category traded down on the prior year, with Women’s accessories being the hardest hit growth-wise (down 54%) and Women’s Outerwear by far the largest impacted in Rand terms.

“An interesting trend to note was that with consumers spending more time at home, they devoted a larger share of their wallet from May 2020 onwards to home-related purchases, in particular home appliances, furniture, accessories and décor. One can also see a clear shift away from formalwear spend in favour of casualwear and essential wear. 

“Within the context of a contracting economy, and a further 2.2 million South Africans jobless by the second quarter of the year, it is not surprising to note that from June onwards the market contracted by 9%, every month, compared to the same period last year. Homeware is the only category that has experienced positive growth since June, with every other category trading down on last year.”

Dr Christie Viljoen, economist at PwC, says total retail sales were down 4.2% compared to the same period last year.

“The South African economy contracted by 17.1% year-onyear during the second quarter of the year. This included a 15.7% decline in real household expenditure. A combination of employment losses, salary reductions, and heightened uncertainty about the outlook for household finances, forced consumers to tighten their belts.” 

He pointed to Google data which shows that, in the last week of October, South Africans were still spending 24% less time in shopping centres compared to a baseline period of January 3 to February 6. 

PWC expects the South African economy to shrink by 9.4% during 2020 and that only 800 000 of the 2.2-million jobs lost in the second quarter will be recovered by year-end. As such, household spending and retail sales will remain under significant pressure towards the end of 2020. 

“PwC’s baseline scenario indicates that it will take three years for South Africa’s gross domestic product (GDP) to return to 2019 levels. Under a downside scenario, this recovery could take up to six years. A similar timeframe is expected for a recovery in jobs.”

The RLC is planning to add new categories to cover the beauty segment and called on retailers in this sector to join the RLC, to ensure a definitive state of the market report going forward.

“With Black Friday and Christmas in the last quarter of 2020, the report is a valuable tool to track growth of a category, region and even a specific week in the retail cycle. Our members find the monthly reports give them solid insight into their performance relative to the market. It provides senior decision makers with highly valuable information to assist with strategic decisions and marketing/promotional plans.”

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