Back to school: Retailers pencil in a better February

31 January 2021 - 07:50 By nick wilson
A Pep store in Balfour Mall in Johannesburg. Picture: WALDO SWIEGERS
A Pep store in Balfour Mall in Johannesburg. Picture: WALDO SWIEGERS

With the start of the school year delayed along with traditional back-to-school shopping, retailers hope buying will intensify in the next few weeks.

Retailers are using loss-leaders and promotions linked to customer loyalty cards to attract shoppers in what is an intensely competitive category. They are also extending promotions to cater for the delayed start to the academic year.

But there's no magic pill to boost sales as consumers' finances continue to deteriorate due to Covid-19 restrictions that have led to job losses.

TPN Credit Bureau said in a statement this week that a "growing number of parents with children at fee-paying public schools find they can no longer afford school fees". And a survey of 1,200 South Africans by Game in December 2020 found 67% of parents "were concerned about finding the funds for stationery and other school supplies".

Even so, retailers are hopeful.

CNA CEO Benjamin Trisk says his "gut feeling" is that sales will start intensifying in the weeks up to February 15. While it is "too early to say exactly how sales are going to look for all of us", so far back-to-school sales are "well down right now, compared to last year".

Another unknown is the effect job losses will have on sales. "We have had a lot of people who have become unemployed through Covid and how they are managing I have no idea. That is another pressure and we don't know how it will play out," Trisk says. As a result, establishing attractive pricing points for consumers is "more critical than ever".

CNA has aggressively slashed prices and is using loss-leaders, such as a calculator that it is selling at "under our purchase price", to attract customers to stores.

TFG CEO Anthony Thunström says the "lingering uncertainty around when schools would open as well as the actual delay itself have had a negative impact on school-wear sales in January".

TFG owns Jet and Foschini.

With children at home, laptops, computers are particularly popular

"We source a lot of our product from our local manufacturers and unfortunately this has a knock-on effect on them as well. The economic impact of Covid, especially as it relates to job losses, has further impacted school-wear sales this year," says Thunstöm. The group is fortunate that "school-wear is a very small proportion" of its overall TFG Africa sales, he says.

Pepkor, which owns Pep and Ackermans, said in a trading update this week that the "delayed start to the academic school year will have a major impact on back-to-school sales performance in January 2021, which is expected to shift to February 2021".

But it said its stores were "ready to offer customers a full product range at market-leading prices when schools reopen in February".

Shoprite Group says as part of its back-to-school promotion, customers who have the Xtra Savings loyalty card are able to buy a full uniform, including a short-sleeve shirt, shorts or skirt, socks and school shoes, for R100 for selected ages and sizes.

Massmart says the group had a "gradual increase in back-to-school shopping over the past week" with Game customers "mostly shopping in-store versus online".

Mike Prentice, merchandising executive for Spar, says there are usually two waves of school-related spending, the first in December "with consumers buying stationery as Christmas presents". The second wave of stationery spend is in January, ahead of the schools opening. With the delay of schools opening due to the pandemic, "we expect to see this spend coming through during February", he says.

John Bradshaw, retail executive: marketing at Pick n Pay, says: "Our Smart Shopper loyalty programme has shown which products our customers want to buy in bulk, so we've included these in our multi-buy promotions to help customers maximise their savings. With children spending more time at home, laptops, computers and tablets are particularly popular with our customers."

PNA says though its business is "non-discretionary", the financial strains brought upon customers by the pandemic have affected their buying power.

PNA says it has not used loss-leaders to attract customers, but has been negotiating "hard with our suppliers, and our franchisees reduced their margins to keep our back-to-school product prices as competitive as possible".