Retailers had a bleak Christmas, say analysts

The bunting was out, the crowds flocked to the malls and the tills were jingling. But experts have predicted that this year's Christmas will be a bleak one for retailers.

The figures on spending are not in yet, but despite upbeat comments from some retailers the financial outlook is poor.

Chris Gilmour of Absa Investments expects a "relatively poor" Christmas season and a financial hangover next month.

"I can't see where people are getting the money from now that unsecured credit has evaporated," he said.

The EY/Bureau for Economic Research retail survey suggests that sales growth will be less buoyant.

But Derek Engelbrecht, retail and consumer products sector leader at EY, said volumes "should top the rather weak number recorded last Christmas".

Consumers are reeling from petrol price increases, high food prices and a weaker rand. The impact will be felt more fully in the new year.

But South Africans decided to spend more this year, according to a survey by Deloitte. They planned to increase spending on gifts on average by 4.75%, which includes an increase in spending on food (up 3.7%), gifts (up 7.18%) and socialising (up 8.96%).

Consumers planned to spread their budget somewhat evenly across food (35%), gifts (23%) and socialising (20%).

Although South Africans were set to have a slightly larger gift budget compared with last year, the Deloitte survey said the average price would be significantly reduced for gifts (down 23.4%) and vouchers (down 34%).

Consumers were set to cash in on their loyalty programmes and 45% were likely to spend points (up from 31% the previous year).

Most of the gift budget was to be allocated towards children (36%), with about five gifts per child.

Unlike 2012, during which cash topped the gift wish list, Deloitte said adults wanted chocolates. This was closely followed by money, clothes, shoes, books and vouchers.

Men wanted practical gifts and entertainment and women wanted personal gifts such as clothes, jewellery and perfumes. Smartphones were ranked ninth overall, and one in five parents bought smartphones as gifts for their teens, the survey noted.

Impulse shopping was not on the cards and the key considerations were price and perceived value for money.

Although consumers were converting to shopping online, they were enjoying the ambience and festive vibe associated with shopping malls over the period.

But online sales were claiming more sales of digital-type gifts such as music, books and games. Physical stores were still preferred when it came to food.

The Deloitte survey said 42% of consumers said holiday promotions would prompt them to spend more during year-end festivities. But 34% of consumers would spend less during year-end festivities because they were in debt (this was most evident in the age groups 35 to 54).

Respondents said R1 out of R5 spent on gifts would go towards personal indulgence.

Unlike last year, chocolates were to be the most likely gift adults would receive this year, followed by cash and clothes, which are joint second in popular gifts for adults.

Jewellery, books and gift vouchers made up the other popular gifts that South Africans would be buying. CDs slipped from third to eighth place, signalling a shift in the way music is bought.

Consumers in South Africa, Greece, Spain and Germany had planned to significantly reduce the value of individual gifts compared with last year, in contrast with East European countries, where spending was on higher price tags.

The Swiss would again spend the highest monetary value per gift on average, expected to be more than double the average gift price in countries such as South Africa, the Netherlands and the Czech Republic.

E&Y's Engelbrecht said furniture and household appliance retailers - the sector that has arguably been hardest hit by the slowdown in unsecured lending - indicated that sales volumes remained low in the run-up to Christmas.

But sales of hardware products and semi-durable goods such as clothing, footwear, sporting equipment, CDs and toys remained strong, and sales of non-durable goods such as food, beverages, groceries and cosmetics were recovering from low levels recorded earlier in the year.

Massmart, which owns Makro, recently sold a 50-year-old bottle of Glenfiddich whisky to a Pretoria-based woman for R300000.

A single shot is estimated to be worth R10000. This was the first time Makro sold a bottle of this kind despite the fact that it had advertised the products every single year in the recent past.

On average, Makro sells about 20 bottles of brandy or whisky worth just above R20000 in the Christmas period. Another 50 bottles of more special brandy worth as much as R30000 are sold.

This year Makro's premium liquor sales did much better than the previous years owing to the increased marketing force behind it, according to managing director Doug Jones.

Massmart subsidiary DionWired has also seen increased demand for the latest technology gadgets.