Black Friday boosts November retails sales to 8.2% — surprising economists
Some economists expected the figure to be 4.1%, but still anticipate the festive period overall to not have been ‘particularly strong’
Retail sales posted their biggest jump since 2012, bolstered by Black Friday sales as cash-strapped consumers deferred purchases to November.
Retail trade sales increased by a higher than expected 8.2% year on year in November 2017 (R94.67bn) after a 3.2% rise in October (R82.43bn).
Strained consumers, waiting for Black Friday sales, bought clothing, shoes and furniture.
In the past three years, November retail sales have jumped on average by 8.4% month on month, growing 10.1% in 2016, compared to an average of just 3.6% in the three years to November 2011.
The figures signal significant buying during the Black Friday month, in the context of relatively lacklustre trading updates from many domestic retailers, said FNB senior economic analyst Jason Muscat.
Black Friday has become an important event for retailers, driving sales in a weak consumer economy.
But the streak was an anomaly, spiked by a singular event. Economists expected December sales to follow the same route but “definitely” not as high as the November sales.
“The outcome suggests that both consumers and retailers remain constrained, forcing retailers to provide deep discounts to drive top-line growth, thereby sacrificing margin, and consumers to seize on opportunities of perceived savings,” said Muscat.
High-end retailers such as Woolworths have reported lower margins. On Monday the retailer’s South African-based operation warned that its half-year profit could drop by as much as 17.5%.
“Affordability is the name of the game for consumers in SA,” said Cratos Wealth Management analyst Ron Klipin, “Those who can deliver affordability to the market get ahead.”
Many retailers kept prices well under control in order to boost the top line which has resulted in poor profitability, while online retailers such as Takealot and Spree have been buying market share, said Stanlib chief economist Kevin Lings.
Equity Analyst Damon Buss said consumers, especially at the lower end were struggling, although people were getting real wage increases. Middle-income consumers were getting negative real wage growth.
Shoprite, which has both high-and low-end retail stores in its Checkers and Shoprite brands, grew sales in its stores despite a nationwide workers’ strike in December. Sales for its core South African supermarket business which includes its U-Save brand rose 7.8% while internal inflation fell to 0.4%.
Mr Price Group recorded retail sales of 8.3% to R6.9bn. In SA, its online store outperformed store sales.
TFG reported a strong performance from festive season sales. The retailer delivered a “very strong” trading update after Black Friday, followed by a better-than-expected December performance in which consolidated turnover climbed 31%.
Portfolio manager at Vestact Asset Management Byron Lotter said retailers took heed of the market trends and were cautious in handling their debt and pricing. Some, however, were not as sharp and instead increased prices.
He points out that Woolworths, in fact, has increased prices, despite consumer buying power being under pressure.