The Easter shopping season is expected to signal the start of a turnaround for retail in South Africa, according to a mixed method research study* conducted on behalf of Capital Connect, a fintech that offers fast and flexible business funding to South African retailers so they do not miss out on retail growth opportunities.
The research forecasts that the total retail sector will benefit from a R2.219 billion boost in turnover over the Easter period, with positive macroeconomic trends expected to help sustain a recovery in retail sales throughout the year. This follows a difficult 2023, when higher interest rates, persistent inflation and low growth dampened consumer spending.
Forecasts for year-over-year growth rates (in real terms) and additional value by retail subsector are as follows:
- General dealers are expected to see real retail sales grow by 1.5% during 2024, compared to a 2.4% decline during 2023. They will capture around R1.38 billion in additional sales over Easter.
- Specialist food, beverages and tobacco stores are forecast to achieve real sales growth of 1.3% during 2024, compared to a 2.2% decline during 2023. They will capture around R521 million in additional sales over Easter.
- Pharmaceutical, medical goods, cosmetics and toiletry dealers to attain sales growth of 0.5% during 2024, compared to a 2.2% decline during 2023. They will capture around R164 million in additional sales over Easter.
- Real sales growth by textiles, clothing, footwear and leather goods dealers is expected to reach 1.0% during 2024 compared to 5.7% during 2023. It is not expected that there will be significant additional sales value over Easter in this retail sub-sector.
- Household furniture, appliances and equipment dealers are expected to see a 1.5% gain during 2024 compared to a decline of 0.9% during 2023. They will capture around R151 million in additional sales over Easter.
- Total real retail trade sales growth by hardware, paint and glass dealers is expected to be 3.2% during 2024, compared to a 5% decrease during 2023. It is not expected that there will be significant additional sales value over Easter in this retail sub-sector.
With inflation tapering and interest rates set to decline, retailers are likely to benefit from improved economic growth and consumer sentiment for the rest of the year.
Says Steven Heilbron, CEO of Capital Connect: “The Easter season holds promise for retailers that are able to capitalise on the latest consumer trends.”
“Those that are able to quickly expand their product ranges and offerings when there is an upsurge in demand, launch creative promotions, and react fast to volatile market conditions will outperform the rest. Diversification of product lines and channels to market are proving to be particularly successful approaches for retailers in these uncertain times.”
According to the research study, products which are anticipated to sell particularly well over Easter 2024 include:
- Easter foods such as pickled fish, meat and chicken for roasting, and fruits and vegetables
- Sweets and confectioneries, including hot-cross buns, Easter breads, Easter-themed chocolates, Easter eggs and crisps
- Alcoholic and non-alcoholic beverages
- Selected clothing: Autumn clothing, holiday wear and swimming wear
- Recreational equipment: Camping equipment
- Home contents products: Television sets, tableware, pots and pans
Leading retailers need to optimise their businesses well before the start of a busy season like Easter to get the best possible results. Those that are most successful balance short-term agility and seasonal tactics with long-term brand building and close customer relationships.
The critical success factors include a strong brand culture, solid upselling and cross-selling strategies, attractive real and virtual storefronts with Easter-relevant branding, a seamless omnichannel experience, smart inventory planning, excellent in-store service and finely tuned marketing.
Heilbron adds: “Whether retailers want to invest in seasonal inventory, buy products in bulk at discounted rates, expand into new channels, or revamp their stores, they need access to fast, seamless opportunity capital to execute their strategies. With Capital Connect, you can apply for business funding of up to R5 million from our app and the funds will be in your bank account within 24 hours.”
Find access to the full report here.
Find out more about Capital Connect’s retail fintech funding solution here.