Press Releases

Load Shedding over the Festive Season

22 November 2022  |  By Lesaka
South African retail sales forecast to top around R1.2 trillion for 2022

Record levels of load shedding have sliced an estimated R122 billion off potential South African retail sales in 2022, with retailers expected to ring up R1.24 trillion in sales for the full year. Without frequent rolling blackouts, retail sales would have been expected to reach around R1.36 trillion for the year. That’s according to research conducted by the Bureau of Market Research (BMR) on behalf of Capital Connect.

The research reveals that the motor trade was hit even harder than retail by constant loadshedding. Total motor trade sales are expected to top around R812 billion this year. Without high levels of load shedding, the motor trade would have been expected to rack up R891 billion in total sales—a difference of nearly R80 billion.

Says Professor Carel van Aardt, Research Director at the BMR: “With the economy stagnating, rising inflation and growing labour unrest, we are entering the festive season on a downbeat note. As we observed during the Black Friday period, we can expect consumers to focus on necessities and preparing for the new school year rather than on treating themselves and their families to extravagant gifts.”

Bruised by load shedding

The BMR data reveals stark differences in revenues for retailers attributable to the high levels of load shedding*:

Segment

Sales forecast – 2022

Expected sales without load shedding

Difference

General dealers

R558 billion

R613 billion

R55 billion

Specialist food, beverages and tobacco retailers

R112 billion

R123 billion

R11 billion

Textiles, clothing, footwear and leather goods retailers

R201 billion

R220 billion

R19 billion

Fuel

R241 billion

R265 billion

R24 billion

*Numbers rounded up or down to nearest decimal

“These figures paint a stark picture of the challenges South African retailers face as load shedding dampens production, disrupts business operations and batters consumer confidence,” says Steven Heilbron, CEO of Capital Connect, a fintech that offers fast and flexible opportunity capital.

“The tough year makes it especially important for retailers to be on the look-out for growth opportunities every day, and to ensure they capitalise on the all-important festive season trading period. There are still great opportunities in the market for those that are agile and innovative enough to pounce on them. We expect the leading retailers over the festive season to be those that have readjusted their strategies to changing consumer needs and behaviours.”

Capital Connect offers some ideas about how retailers can outsmart their rivals over the festive season:

  • Position for value: Smart shoppers today are not necessarily fooled by door-buster specials—they look for value by the basket. Think about a product mix that offers a mixture of price points and products that will give each customer what they’re looking for. White label and affordable brands will be big sellers as many customers trade down from premium brands. Consider bundling as a tactic to drive basket value.

  • Destination shopping: Following a challenging year, many consumers may be staying at home rather than going on holiday. Be sure to target them with festive events to get them through the doors. Think about festive treats served in your coffee shop or supermarket deli, DIY home improvement workshops and Christmas lunch cooking and baking classes, for example.

  • Start now: Retailers need to activate their festive season campaigns as early as possible to be top of mind for customers when they’re ready to spend, from as early as mid-November. Social media offers a cost-effective way to reach customers with targeted promotions.

  • Focus on the basics: Food, toys and health and beauty are always hot festive season sellers. Look at which products in these categories are likely to be most popular this festive period and optimise your product mix to maximise sales.

  • Be festive: The right signage and store décor goes a long way during this time of the year. This year, it will pay off to offer a welcoming and festive environment, while also ensuring customers can easily find the specials and promos that matter to them.

  • Focus on loyalty: Don’t just pursue transactional business—build relationships with loyal repeat customers. The2021 Truth & BrandMapp Loyalty Whitepaper shows that 74% of economically active South Africans are using loyalty programmes. The number of loyalty programmes to which South Africans belong, has increased from 5.6 to 8.7 programmes per person since 2019 (a 55% increase).

  • Collect and deliver: With the fuel price at such high levels, many consumers are avoiding unnecessary trips to the shops. Brick-and-mortar retailers can grow basket sizes by targeting customers with the right festive season offers. Omnichannel and online retailers will want to look at how they can turn delivery and returns into an advantage.

“The key to accessing these opportunities is affordable and hassle-free opportunity capital,” says Heilbron. “With Capital Connect, retailers apply for a business loan from the Connected App, choose their desired loan amount of up to R5 million, select their repayment period - and the funds will be in their bank account within 24 hours or less, so they never miss out on golden retail opportunities.”

$LSAK, $LSK