The latest NIQ State of the Retail Nation report reveals a 3.4% growth in retail sales, driven by price increases amid ongoing economic pressures on South African consumers. Significant trends include the strong performance of private label brands and the impact of consumer sentiment on spending behavior. The T&D sector remained hindered by telecom market saturation, despite growth in other segments.
NIQ South Africa has released its latest analysis, the \”State of the Retail Nation\” for the last quarter and full calendar year of 2024. The report indicates moderate growth in retail sales, totaling nearly R637 billion on fast-moving consumer goods (FMCG), reflecting a year-over-year increase of 3.4%. This growth is primarily attributed to price increases rather than an uptick in consumption.
The Technology & Durables (T&D) sector registered flat growth of 1.8% with R90 billion in sales. Notably, the telecoms market, which constitutes over half of T&D sales, experienced a 2% decline. In contrast, washing machines emerged as one of the sector’s best performers, achieving a sales value increase of 16% for the year.
“Despite much-improved consumer sentiment off the back of lower levels of load shedding… retail recorded only moderate gains in sales during 2024,” stated Zak Haeri, Managing Director for NIQ in South Africa. This statement underscores that high unemployment and rising living costs continue to pressure households, prompting consumers to seek greater value while shopping.
During 2024, South Africans allocated R359 billion on food and liquor and R278 billion on other consumer goods, which include personal care items, snacks, and tobacco. The private label segment significantly outperformed the broader market, achieving 7.1% growth and totaling R98.7 billion, bolstered by a shift toward cost-efficient shopping behavior among consumers.
The FMCG sector notably flourished in the fourth quarter with 4.8% growth, translating to R177 billion in retail value. Strong consumer spending was particularly evident in December, whereby retail spending rose by 9% year-on-year. This festive season emphasized continued consumer preference for at-home activities, with food and liquor comprising a significant 58% of holiday sales.
“Consumers are still focusing on essential spending and taking advantage of loyalty programmes… to stretch their rand further,” remarked Haeri. Consumers appear to be leveraging bulk purchases for cost savings while still displaying growth tendencies in super-premium offerings, suggesting a diverse landscape of spending behavior.
Despite a prosperous Black Friday, the T&D sector faced challenges due to market saturation, particularly in the telecoms segment, which represents 53% of sales but saw a 2% decline. Nevertheless, some segments, including IT and major domestic appliances, reported impressive growth rates.
Notably, the T&D sector recorded increased online sales, up 9% for the year, as consumers sought better deals, an indication of changing shopping preferences in the digital marketplace.
Looking ahead, Haeri voiced concerns regarding potential challenges such as a VAT increase and global trade volatility. However, he expressed optimism that consumers will continue to adapt to changing economic conditions, with retailers that successfully balance value offerings and premium opportunities positioned for success in the upcoming year.
In summary, the NIQ report highlights a mixed performance in the South African retail landscape for 2024, emphasizing a significant shift towards value shopping among consumers amid economic pressures. While FMCG sales showed moderate growth, the T&D sector faced challenges primarily driven by market saturation in telecoms. As consumers navigate these economic uncertainties, retailers are encouraged to adapt their strategies to meet the evolving needs of their customer base, particularly in offering value through promotions and loyalty programs.
Original Source: www.zawya.com
