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p20 :: Industry Holiday sales better than expected Retail sales during the past holiday season were slightly better than last year, although the weakening currency and worrying economy are cause for concern. JOHANN DU TOIT reports on the results of the annual Sports Trader survey of holiday sales in the sport, outdoor and lifestyle retail industry Despite a very tough year, 2013 holiday sales in most sport, outdoor and lifestyle retailers were better than expected, responses to the annual Sports Trader Holiday Sales survey* showed. Sales were largely as expected, with no nasty shocks in terms of sales. While sales haven’t grown exceptionally, they haven’t been exceedingly bad either, and have increased slightly since the 2012 holiday season. The worsening currency value and poor economic forecasts, however, affected consumers negatively, which prevented strong holiday sales figures. December sales figures The average response to our survey shows that December 2013 sales where slightly better than last year’s, with 50% of respondents reporting better sales, and 15% saying that sales were about the same. Slightly more (15% compared to 10%) respondents claimed much higher sales, with 20% or more growth. However, the number of respondents reporting drastically lower sales (decreasing 20% or more) than last year has increased by 3.3%. This would suggest that the gap between retailers having a good year and retailers having a bad year, is increasing. The average responses to our survey over the last four years concerning pre-Christmas sales indicate that the growth of sales between 2010 and 2011 was followed by a sharp decrease in sales growth in 2012 (See Fig 1). 2013 was a better year, with a slight recovery from last years’ recession. Retail respondents are not overly positive or negative about their December sales. About a third (30%) of respondents had better pre-Christmas sales than expected, while 30% reported lower sales than expected. The majority (40%) of respondents say that the pre-Christmas sales were about the same as expected. Taking an average of theses results, it seems that retailers had a fairly predictable pre-Christmas period. Taking into account that retailers considered 2012 a particularly bad year, this could mean that retailers have come to expect the worst for the holiday season. This is excusable when looking at the holiday sales expectations of retailers over the past four years (See Fig 2). After 2011 largely exceeded respondents’ expectations, 2012 was exceedingly worse than expected. It seems as if retailers could predict Most South Africans expect their spending power to increase in the next year how sales would be in 2013. Although sales were as expected, several retailers and suppliers within the industry have told Sports Trader that this year was an especially tough year, some even stating that it was their worst year on record. Most respondents (45%) had fewer customers than expected, 25% had more customers than expected and 30% the same number. International expectations According to a Deloite survey** of consumers in 18 European countries, as well as South Africa, consumers in many countries are optimistic about the current state of the economy for the first time since 2008. Consumers in most other countries are more optimistic about the current economy than last year, South Africans, however, are more pessimistic with an overall negative outlook of the economy. After years of considerable growth, retailers in the European Union (EU) have probably reached a plateau, according to a report published by IFH, the Cologne-based institute for retail research. This could mean that in 2014, European consumers might be less optimistic, which could influence South African markets. Spending trends In our survey, 75% of retailers stated that items sold at the middle range of prices were popular during the holiday season. Functional, yet expensive, items were also very popular, with 45% of respondents stating that these products sold well. This is likely due to formally employed consumers being less affected by economical woes and having more cash in their pockets. According to the latest BankservAfrica Disposable Salary Index (BDSI) disposable income increased by 7.6% throughout the year, up to September 2013. Lower priced products did not sell very well, with only 20% of respondents saying that it sold well in their stores. This could either mean that South Africans are starting to spend more on their gift purchases — or that low income consumers simply didn’t have the money to buy sport, outdoor and lifestyle items. The Deloite survey determined that the average budget per gift for South Africans in 2013 was R310. It should be noted that the Deloite survey was an online survey, so most of the respondents would be representative of the upper and middle class customers. The relatively high average budget per gift means that functional sport and outdoor products, such as clothing and footwear, were within December sales growth 2010-2013 0.61 0.6 0.59 0.58 0.57 0.56 0.55 0.54 0.53 0.52 0.51 2010 2011 2012 2013 Expectations of December sales 0.6 0.55 0.5 0.45 0.4 0.35 0.3 2010 2011 2012 2013 Fig 1 (far left): The December sales growth reported by respondents to the Sports Trader survey improved in 2013, after a sharp dip in 2012. Fig 2 (left): In 2013 retailers responding to the Sports Trader survey expected that pre- Christmas sales would improve. Fig 3 (right): The import value of sporting goods in the 3rd quarter, when most Christmas and January goods will be imported, have been rising steadily since 2011. Sports Trader :: 2014 March
Industry :: p21 Most products bought December the gift budget of the average South African. This seems to be in line with international trends. UK-based OCC outdoor conducted a survey among 30 UK outdoor retailers and found that the highest selling products, by far, were outdoor clothing. The Deloite survey also evaluated which marketing strategies convinced customers to buy certain products. On a scale of 0-3 on how influential loyalty/reward programs are in purchasing decisions (0 = not at all, 3 = very influential), South Africans averaged a score of 2, which is higher than the 1.7 average of the 19 countries surveyed. Most South Africans prefer immediate discounts on purchases, instead of earning points offering gifts. Online shopping is becoming a popular tool for South African consumers. According to the Deloite survey, South Africans spent 21% of their gift budget online in 2013. This is substantially higher than last year’s 13%, but still lower than the European average of 28%. Even though online shopping has grown, South Africans still prefer to compare prices by visiting stores, rather than online on websites. When buying gifts in store, South Africans prefer to buy in specialty stores, instead of supermarkets and shopping malls, which is good news for independent retailers. Of the 19 countries surveyed by Deloite, South Africa has the second highest (after Ireland) number of users of smartphones and tablets with which to buy products, with 38% of surveyed smartphone and tablet users claiming to have purchased a product in the past. Millions 48% 13% 10% luxury 29% January 2014 vs 2013 sales 16% funconal yet expensive mid-price lower priced 450 400 350 300 250 200 150 100 50 0 2010 2011 2012 2013 15% 30% 10% 21% a lot higher 32% Q3 Sporting goods imports 21% Main retailer challenges (>20%) a lile higher (20%) alile lower (
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