RETAILING: Cautious Approach To Festive Spending
Recent Western Cape Business News
- Entry As SME Not So Restrictive
- Digital Education is Set to Be Highlighted at An Apple in Education Awards Competition This Year.
- Urban Renewal, Chinese FDI, New Asset Classes: What To Expect From Property This Year
- Lonrho Abandons Cape Ships
- Global Online Businesses Accessing Consumers in Sub-Saharan Africa
South African consumers are beginning to tighten their belts ahead of the upcoming festive season, with the majority determined to spend less and get the best value they can out of seasonal sales and in-store special promotions, says Deloitte in its annual Year-end Holiday Survey, which compares potential consumer buying patterns in South Africa and 18 European countries.
In its 14th Deloitte Year-end Holiday Survey, which took into consideration the views of a selected sample of 18 354 respondents during September 2011, several major shopping trends became obvious, said Rodger George, Consumer Business leader of Deloitte South Africa.
“South Africans are approaching the 2011 holiday season with caution. Our research has shown that 62% of local shoppers believe that the South African economy is in recession”. Their response to this is measured in the fact that 69% are aiming to buy less expensive presents this year; “78% of South African shoppers have said also that they will buy goods on sale,” says George.
Colleague Michael van Wyk, Deloitte Consumer Practice leader concurs, saying that 67% of consumers across the country are saying they will look to buying ‘owned-branded’ products in-store rather than typical brands.
“This year shoppers say they will be buying the same or more of these products. Although this approach is prevalent among lower and middle-class shoppers, the trend is now extending strongly across higher income earners, with 62% indicating that they would fill up their baskets with retailer branded or discount goods,” says Van Wyk, adding: “South African consumers are undoubtedly stressed and looking for options that will allow them to spend less, whilst still satisfying all their usual gift obligations.”
Other key purchasing indicators for the festive season are:
· 90% of surveyed shoppers will be seeking purchases that are useful
· 84% will be buying less ‘impulsive’ gifts
· 78% will be purchasing goods that are ‘on sale’
· 43% of South Africans say they will spending less on holidays
· 40% say they will be spending less on entertainment
· 63% say they will be spending more on essentials such as groceries, and
· 38% will be using loyalty points earned during the year to make purchases if available
As far as gift choices are concerned, the following trends were revealed by the Deloitte Year-end Holiday Survey:
· 59% identified cash and gift vouchers as the most desirable gifts, although only 32% of adults are thinking of giving these gifts to their partners
· Cosmetics and perfumes are most likely to be offered by men to their partners
· Beauty care products (including spa treatments) and chocolates will follow hard on the heels of cosmetics and perfumes as gifts to women
· Video games, cash or CD’s will lead the gift stakes for teenagers, and
· Toys, games and puzzles will be bought for smaller children as many parents feel they must give their offspring gifts that ‘encourage learning’
But, adds Deloitte, despite taking a cautionary approach over the year-end, South Africans are more optimistic about 2012 than their European counterparts. Figures show that 69% of South African consumers expect their spending power to stay the same or increase during 2012.
“Although we are affected by the global recession, our positioning within Africa and the emerging markets basket of countries has cushioned us from some of the effects of the global meltdown. This may be responsible for some of the optimism being displayed toward 2012 by South Africans’ says Kay Walsh, senior economist at Deloitte.
“Fundamental retail figures are also pointing to some resilience with emerging middle-class shoppers still playing a key part in the expected recovery, although job losses and increased costs such as electricity and fuel could offset these expectations for consumers.”
The outlook in Europe
In Europe, reveals the Deloitte Year-end Holiday Survey, consumer confidence is at low ebb, but the desire to celebrate the holidays remains strong.
The debt crisis in Europe, coupled with successively lowered growth forecasts, has dealt a devastating blow to those hoping for a brighter future. More than six out of ten European consumers think their country is currently in a recession, and as expected this perception significantly increases across selected countries such as Greece, Portugal, Italy, Spain and France.
However, European shopper resilience is forming for one last time as European shoppers expect the recently announced austerity measures and higher tax burdens to only impact household budgets during 2012, leaving the spending expectations over this holiday season similar to those experienced last year in Europe.
Indications are that therefore that only 57% of shoppers (69% in South Africa) are intending spending less on expensive presents; 65% will be buying gifts on sale (78% in South Africa) and 55% will be buying house brands in an attempt to reduce costs (67% in South Africa).
“Previous surveys highlighted the emergence of the Internet as a retail channel for holiday season purchases for those who have access to the internet. Moving beyond a simplified distinction between online and offline channels, consumers have opted to make use of both channels at all three steps of their buying processes, namely searching, comparing and buying,” says George. “In South Africa using the Internet is becoming more prevalent. More than half of South African consumers plan to use a combination of both online and offline channels to research and compare gifts. In terms of electronic goods and media purchases, 13% of these consumers have indicated that they will purchase online, 37% have indicated that they will use a combination of online purchases and 50% have indicated that they will purchase in-store only.”
“In using the Internet to find and compare products, consumers will turn mainly to retailers’ sites, followed by search engines and finally manufacturers’ sites.
“The growing use of retailers’ and manufacturers’ sites reflects the genuine recognition by consumers that this will be an increasingly important channel into the future. Interestingly enough, consumer confidence in the security of payments made over the Internet has declined this year, after several years of steady growth” says George.
Business News Sector Tags:
Fax 2 Email
Study IT Online
Work from Home