Ja-no well fine with a few terribles and excellents added on either end. That just about sums up the feedback we received from retailers in the industry (sport, outdoor and lifestyle) about their Christmas holiday and early January sales.
But, overall, there was more good news than bad reported in our annual Sports Trader Holiday Sales Survey*. The results reported also showed an improvement from the holiday period the year before.
A third of the respondents reported 10-20% year-on-year sales growth in December. Although many retailers and their suppliers during the year often said that 2018 was as bad as it gets, a further quarter of the respondents reported that their sales were none worse than the previous year.
Compared to the year before (December 2017) industry retailers were considerably more positive in 2018. In 2017 nearly a third of the respondents reported a low growth of 10% or less, only 10% reported sales growth of 10-20% and 8% had exceptional growth in sales.
In 2017 more than a quarter (28%) reported that their sales were slightly down on the year before, but 15% said their sales were up to 20% down from the year before.
In December 2018 the percentage of respondents who said their sales were significantly higher than the previous December was the same (13%) as those who reported significantly lower sales.
“We experienced growth for December at an average of 10% in like-for-like stores and a total growth of 42.5%, which includes our six new stores,” says a respondent who describes himself as an independent sport and lifestyle retailer.
And despite the negative reports from many in the trade, “2018 was brilliant, I grew 50% year on year,” says online sports retailer Patric Kalous of Racketlon SA. “Christmas and January was just the cherry on the top.”
As can be expected, the retailers who recorded lower sales than in December 2017 describe their December sales as disappointing — although a small number philosophically describe it as “about what I expected”.
Interestingly, even though they reported sales growth of 10-20% more than the year before, several of the respondents from chain stores described their holiday sales as disappointing. Half of the respondents who reported a sales increase of 10-20% say this was what they expected.
Most of the retailers whose sales were about the same as the year before did not have high expectations, as 71% say it was “about what they expected.”
A representative from a major lifestyle footwear and clothing chain was, however, pleasantly surprised that their sales were on par with the year before.
It would seem that the economy has curbed consumers’ ability to splash out on the luxuries for Christmas. The largest group of respondents (44%) say their customers predominantly bought mid-priced functional goods, followed by 34% who said they mainly sold entry level necessities to mid-priced functional items in December.
This is a buy-down from 2017 when 59% of the respondents said their customers mainly bought mid-priced functional items and 21% sold mainly entry-level items.
In many instances these included back to school gear, which would have been precipitated by the earlier start of the school year. Nearly half (46%) of the retailers who sell sports goods also report higher sales compared to last year for December, which is usually a relatively quiet period for sporting goods retailers — which could be linked to buying back- to-school sportsgear as Christmas gifts.
The early opening of the schools also benefitted outfitters supplying schoolwear. “We had a good December, followed by a good start to January because of the schools,” says Ashraf Laher of Rand Outfitters.
January also started positively for almost half (46%) of the respondents, who reported that their sales were better than the year before — although the survey was conducted towards the middle of the month before the full-month’s sales figures could be compared.
The highest number (26%) reported modest growth of 10% and lower in January, but 16% experienced excellent growth of more than 20%.
On the flip side, 23% reported January sales that were up to 10% lower than the year before and 13% said their sales were up to 20% lower.
Call it a sign of the times, but it seems that because more cash-strapped customers are nowadays hunting for good deals, retailers in the industry are becoming more accepting of the Black Friday sales frenzy.
Only 14% of the respondents to our holiday sales survey did not offer Black Friday deals at the end of November. On the other hand, 45% participated fully by offering substantial (more than 20%) discounts and a further 28% offered discounts of between 10-20%.
Compared to the negativity of previous years — and the damned if you do, damned if you don’t attitude before the event — 59% of the respondents felt that Black Friday had a positive impact on their businesses.
The retailers who had a positive experience with Black Friday mainly attribute it to the fact that the mark-down sales day enabled them to clear old stock and also because it attracted new customers to their stores. Nearly half (45%) of the respondents who offered substantial discounts say it had a positive impact on their businesses.
The retailers who reported a negative impact from Black Friday complained that their December sales were down because consumers bought their Christmas presents at discount prices on Black Friday … or worse, that their regular customers went bargain-hunting elsewhere.
Only a fifth said that Black Friday had no impact on their December sales.
This is quite a shift from December 2017 when 36% respondents did not participate in Black Friday sales. More than a quater (28%) of the respondents then said Black Friday affected their December sales negatively, and 42% said that Black Friday had no impact on their December sales.
Of the 30% who believed that Black Friday had a positive impact on their sales in 2017, 22% reported that it helped them clear stock and 8% said it attracted new customers to their store.
When the year started, most of the retail respondents only saw doom and gloom for the year ahead — but that was before we received some good news in January like a 0.4% drop in unemployment numbers, overall manufacturing and retail sale improvements, a trade surplus, a drop in the petrol price, international investment promises, the release of a United Nations report that foreign direct investment into South Africa had grown 446% from $1.3-bn in 2017 to $7.1-bn (R98.6-bn) in 2018.
Instead, they concentrated on the reality of consumers getting poorer every year as prices go up due to the higher VAT and petrol price, while salary increases remain low. And that was before the power outages started.
Therefore, early in January less than a fifth of the retailers said that they expected a good year in 2019 — and they were mainly retailers who had a good year in 2018.
Some did feel positive. “The last five months of 2018 showed some positive growth and with the drought no longer an issue we are expecting more growth in 2019,” says Jeremy Hare of the Great White Sport & Surf Wetsuit Warehouse.
“I expect the (positive) trend to continue for the first quarter because we still have good stock left,” adds Laher. “The reason for all this is that we were better prepared for our customers’ needs compared to the previous year and we had depth in stock in the lines that mattered. Also, a little discounting on one or two brands helped.”
Others have pinned their hopes to renewed consumer confidence after the election on 8 May. “I am positive that after the election consumer and business confidence will bounce back,” says an anonymous outdoor retailer who hopes that his good sales will continue in 2019.
But, 16% of the respondents had a more cynical outlook: 2018 was such a bad year that things can just improve, they believe.
“The economy will remain weak and I expect consumers will not have much money to spend. I don’t believe there will be much change from 2018,” Frankie Sequeira of Novels Sport in De Aar sums up the feedback from the majority (55%) of respondents.
* The Holiday Sales Survey is conducted every January/February by Sports Trader among South African retailers in the industry. The 2018 respondents are predominantly (95%) independents that sell sporting goods and clothing (26%), sport and outdoor goods (20%) Outdoor gear and clothing (13%), and lifestyle footwear and clothing (42%). Respondents are given the option to respond anonymously, and most do.