South African consumer spending shows uptick ahead of the festive season - Mastercard SpendingPulse

Black Friday discounts spur shopping frenzy, with retail sales up 11.6 percent compared to last year

Consumers are ringing in the holiday season with a solid start to retail sales, according to Mastercard SpendingPulse™, which looks at overall retail spending trends across all payment types including cash and cheques.

Black Friday sales at bricks and mortar stores climbed 11.6 percent year-over-year (YOY) including the effects of inflation.

“Black Friday bargain hunting in South Africa continues to spur growth in the retail sector during the festive season shopping period, indicating that price-sensitive consumers are increasingly shifting some of their Christmas spending to November to take advantage of discounts and promotions offered by retailers. This marks a change in fourth quarter spending patterns,” says says Michael McNamara, Senior Principal, Data and Services at Mastercard.

“Despite fewer shopping days between Black Friday and Christmas, the sales outlook remains positive overall. A shorter holiday season puts more importance on each shopping day of the season, making the role of the internet important in helping consumers instantly compare prices.”

October – South Africa’s third biggest month for retail spending after December and November – saw retail sales rise 1.2 percent over the same month in 2018 when the effects of inflation are removed. Including the effects of inflation, retail sales rose 4.2 percent YOY, as consumer prices ticked up slightly in October amidst higher oil prices and a weaker Rand.

Retail sales climbed 4.6 percent between January and October including inflation, compared to the 5.7 percent pace seen for the same period in 2018.

“Retail performance this year clearly indicates that the South African consumer remains under pressure. Rising unemployment, decelerating wage growth, a decline in consumer confidence and soaring electricity prices continue to dampen consumer spending. However, as we approach the final few days of the holiday season, South African consumer’s continued appetite for deals and last-minute sales will give a strong final push through the 2019 festive season shopping period,” says McNamara.

Highlights from the Mastercard SpendingPulse October report include:

• The apparel sector continues to grow, with sales rising by 4.1 percent over last year’s level after adjusting for inflation, driven by discounting and stock clearance.

• For retailers selling pharmaceuticals, medical goods, toiletries, and cosmetics, growth in sales continue to outperform total retail with sales, growing 2.7 percent YOY when the effects of inflation are removed.

• Continuing the trend observed for most of 2019, General Dealer sales continue to decline, down 3.8 percent YOY after removing the effects of inflation. Price increases for staples such as breads, cereals and sugar, has added pressure on sector spending.

• Food and beverage sales declined 0.6 percent YOY after removing the effects of inflation.