An insight for the year to come
From what’s come through my desk and over the internet over the last few days, it seems reasonable to speculate that the local retail industry has enjoyed a decidedly positive Christmas trading period for the first time in two years. Although details for the December /January period have not yet been released, several retailers have reported improved results despite seeing significant price deflation for the period.
Shoprite Holdings reported 9.5% rise in first-half turnover, with comparable store sales up 2.8% in the six months to end December and an internal deflation of 1.2% for the period. Massmart also reported a 13.3% increase in sales in the latter half of the year and an estimated 2.9% deflation was recorded year to date. The Clicks Group enjoyed an increase in sales of 16.8% with selling price inflation of only 0.9%.
In the final weeks of 2010 TNS Research Surveys released its latest Economic Confidence Index (ECI) results for metropolitan adults, conducted in the first week of November. The overall ECI was up four points from the previous quarter to 137, maintaining the highest levels it has seen for 2 years. Click here for more
This increase in consumer confidence, together with the lowest interest rates seen in the last 30 years, could make 2011 the year of the consumer comeback. Prof Deon Tustin, executive research director of the Bureau of Market Research (BMR) at Unisa, provides further impetus with the release of his report, Forecast Of Economic Indicators And Formal Retail Sales By Product Group For 2011. Amongst other things the report forecasts a 3.4% real growth rate for formal retail sales in 2011 which, if it holds, is cause for optimism amongst retailers. Click here for more
Despite very high levels of debt amongst consumers, 2011 has the potential to be a year of strong sales growth for the FMCG industry. The sales growth is positive but retailers will have to cope with very low levels of price inflation, this environment should provide a platform for the most efficient retailers to outperform competitors and gain market share. It will be interesting to see who the 2011 winners are.
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