Tag: retail

Source: Supermarket & Retailer 

It’s no secret that South African shoppers are beset by a storm of rising prices and it seems their shopping baskets are definitely feeling the pain with the average consumer now hyper aware of what they’re purchasing.

As a result, the latest Nielsen Shoppergraphics Report – which looks at shifts in consumer purchasing behaviour within 4 000 representative households across the country on a quarterly basis – reveals local consumers have dropped products from an unprecedented three grocery categories from their shopping basket; namely Household/Cleaning Goods, Beverages and Toiletries.

Nielsen CPG client service director Kelly Arnold comments; “It’s no secret that South African consumers are experiencing a severe wallet squeeze thanks to a raft of rising costs including spiralling petrol and electricity prices, the implementation of sugar tax and a VAT increase to 15%. The effect that this has had on consumer behaviour is profound and we’re now clearly seeing shoppers jumping out of some categories and consolidating their spend.

“As the household basket has become more expensive, we have also seen consumers limiting the number of trips, to 60 trips a year on average, and the top up shop that used to be twice or three times a week has dropped to once every two weeks, with spend per trip now averaging at R210.”

Overall the volume of sales has grown by 2.8%, with the monetary value of sales growing at about 6.3%.

“That said, we’re simply not seeing massive growth with consumers shopping less and spending slightly less; although there are instances of upgrading to larger pack sizes which may be a contributory factor to the small levels of growth.

“Interestingly, the repertoire or number of stores that consumers visit has increased to 4.9 retailers a year. This is as extremely price conscious consumers seek out deals, and are more prepared to shop around.”

What’s in and what’s out?
Drilling down to category performance, Arnold reports that consumers now purchase around 68 categories per year. “We have seen a move towards consumers spending more on dry groceries and perishables with staples remaining stable. The highest amount of spend is happening in frozen chicken and ready to eat cereals, sugar and UHT milk (a long-term trend) and canned meat. The latter might be because of the Listeriosis crisis earlier this year which compelled many consumers to switch from cold meats.

Looking at the specific categories that have experienced the biggest declines Household/Cleaning Goods which are no longer seen as a necessity have dropped by 6% and Beverages by 6%, with Carbonated Soft Drinks (CSDs) experiencing particularly negative performance.

“In this regard, contributing factors may well be the shift in volumes from 500ml to 450 ml size bottle within some of the top brands as well as an influx of other brands carving out a market share for themselves and now spreading their national footprint,” explains Arnold.

An upswing in branded retail
The Shoppergraphics Report also revealed a shift towards modern branded retail outlets away from independent retail within the LSM 1-6 market.

“The growth in usage of branded retail chains by this market could be due to the fact that more retail chains have opened stores in previously under-served areas with large, traditionally modern trade retailers having invested in this sector in the last two years. We also know that branded retail offers more competitive pricing and is therefore seen as less expensive,” says Arnold.

In contrast, higher LSM groups are increasing their spend in independent retail. “The type of behaviour driving this trend is that higher LSM groups are going to branded retail for their big monthly shops and utilising independent retail outlets to do their more frequent top-up shopping. For example, ‘I’m on my way home to Soweto I stop at the taxi rank where there is a Spaza shop nearby, grab a couple of things as a top-up’, resulting in LSM 7-10 spending more there,” explains Arnold.

To counter these trying times, retailers need to ensure they have the right composition of goods for their shoppers, at the right price given that positive price perception is extremely important for future success.

Arnold stresses: “Retail data has also never been more important in order to move past tough times .”

Source: Supermarket & Retailer

If 2017 is anything to go by, Black Friday is quickly becoming one of the busiest South African shopping days and, like the US, marks the beginning of the Christmas shopping season.

This year, online retailers are preparing for even more hype, but are we getting ahead of ourselves? Let’s take a step back and review what we can learn from previous years:

1. Start early to reap rewards
As early as October 2017, the N1 in Gauteng bore the fruit of well-planned marketing campaigns with enticing billboards. Research shows that more than 50% of holiday shoppers start researching gift ideas in October or earlier. This tells us that we need to plan ahead, and by early November, you’ll need to kick off your campaign to ensure marketing ROI.

Not only does this give you more time to generate opportunity, but useful, published links will start building page SEO – crucial in the ever-competitive e-commerce sphere. Major retailers are pulling out all the stops from well-segmented email marketing to encouraging customers to add products to their carts ahead of the day. But, Black Friday does not only attract the big players but the smaller retailers too. In 2017, Nichemarket listed more than 500 participating stores from niche to e-commerce giants.

2. Integrate and personalise
Sure Black Friday has a certain, recognisable look, but marketing efforts have become more personalised. Think beyond the homepage and set up custom product landing pages. Integrate these with your social media platforms for wider reach. Remember to include your marketing material throughout for a consistent, familiar message. Entice consumers with a clear USP.

3. Set the clock to create urgency
It’s a one-day-only type of thing, so get in with the hype and add a countdown timer to your website. Like Takealot, you can offer exclusive discount newsletter sign-ups with early deal leaks to get your customers on board. If you decide to extend the frenzy to Cyber Monday, communicate this with your customers before-hand. In 2017, Superbalist did this well by gamifying their deals with locks. Not only did they keep their customers informed but engaged throughout the entire weekend.

4. Make the most of seasonal shoppers
Before Black Friday, you need to have your Christmas specials in place to benefit from the Black Friday hype that still lingers. Allow it to link with Black Friday and continue to drive sales after the big day as people continue to shop over the entire holiday season.

5. Involve the entire team for great customer experience
On Black Friday you’ll be very busy. Whilst it’s important to drive sales, involve the entire team to ensure that you don’t neglect your customers. Done right, Black Friday is a great brand awareness tool, but if your customer experience suffers, even the brand loyalists may stray afterwards. You may need to hire extra staff or work longer hours.

6. Consider an omnichannel approach
Customer satisfaction extends to shipping, so consider offering free delivery or perhaps an in-store collect option for those yearning immediate gratification on their spend. It is important to understand the interchange between physical and online stores – consumers prefer an omnichannel approach where they can research and shop both online and in-store.

7. Offer generous discounts
Leading up to Black Friday, Game launched its online store with generous discounts knowing that it would motivate new and on-the-fence consumers to purchase. In the US “Black Friday bargains were bigger, on average, last year“.

Small, negligible discounts just don’t match the hype and it certainly won’t attract the powerful (and savvy online shopping) millennial consumer market. Before your brand jumps on the BF bandwagon, it may be wise to assess whether it’s worth it? Some shops choose deliberately to opt out and so could you.

8. Accommodate mobile users
Make it easy for customers to shop online by optimising your mobile checkout process. Consider adding a one-click checkout option to streamline the process, and offering real-time online support for quality customer support.

By Tom Warren for The Verge

Microsoft and Walmart are teaming up for a strategic partnership that will take on rival Amazon in both technology and retail. Walmart is announcing today, at Microsoft’s Inspire partner conference, that it’s partnering with Microsoft to use the company’s cloud services. The five-year agreement will see Walmart use Azure and Microsoft 365 across the company, alongside new projects focused on machine learning, artificial intelligence, and data platforms.

Walmart is Amazon’s biggest retail competitor, and Microsoft is Amazon’s largest cloud services rival. That rivalry isn’t lost on Microsoft CEO Satya Nadella, who hinted in an interview with The Wall Street Journal that it’s “absolutely core to this” new partnership. “How do we get more leverage as two organisations that have depth and breadth and investment to be able to outrun our respective competition,” says Nadella.

While the tech partnership will obviously benefit both companies, it also comes just weeks after reports suggested Microsoft is working on rival Amazon Go technology for cashier-free stores. Microsoft is reportedly in talks with Walmart for this technology, and the software maker has hired a computer vision specialist from Amazon. Amazon’s Go store in Seattle uses multiple camera and sensors that use computer vision algorithms to detect what items you’re taking out of the store so you’re automatically charged. Microsoft is reportedly experimenting with attaching cameras to shopping carts to track items.

Both Walmart and Microsoft don’t reference too many of the future-facing parts of this strategic deal, and it’s mostly timed for Microsoft’s big partner conference in Las Vegas this week. However, this new deal could be a unique test ground for Microsoft’s bigger AI ambitions and any future plans it has to push other retailers to use its range of cloud services.

Source: Business Day

Nearly 12% of the South African workforce spent more than 60 hours a week on the job. This is despite SA’s labour laws prohibiting more than 45 hours a week.

Mining and retail are the two sectors in which you are likely to work the hardest in SA‚ according to a composite review of professions around the world.

The Organisation for Economic Co-operation Development (OECD) says of the almost 50 countries sampled‚ SA was the fifth hardest working country with workers spending an average of 43.3 hours a week on the job. Looking only at jobs in the formal sectors‚ the OECD found the mining industry to be in the lead with workers putting in an average of 45.3 hours a week.

TimesLIVE spoke to Desire Mokoena‚ a mine production planner from Mpumalanga, who said mineworkers‚ particularly those in production‚ worked 12-hour shifts‚ mostly six days a week. Sharing her perspective from a woman in mining‚ Mokoena said that while the career could be rewarding‚ it was not always conducive for women.

She gave an example of sanitation for women working underground‚ concerns about personal safety‚ and the physicality of the work.

“As you advance forward [in the mine], you leave the toilets behind. As a woman‚ what are the chances of me having to go back to the [entrance] far away to walk to the bathrooms? It is not safe anymore. There are illegal miners underground so anything can happen. So normally the women would find a corner at the pillars and just relieve themselves … It is dark‚ no one can see you‚ but it is unhygienic‚” she said‚ adding there were no breaks in between the shifts.

Ten hours were spent on labour while the other two hours were spent travelling to and from the operations site underground.

“Underground‚ a lot of things need manpower. You pull cables‚ get onto a high machine, and remember‚ the ground is not level. They say it’s uncomfortable for women. Other women end up having back problems because of such things‚” said Mokoena.

According to the OECD‚ wholesale and retail came in second with workers clocking in an average of 44.7 hours‚ followed by finance and business services at 43.7, and transport and communication at 43.6 hours.

Lily Kok, who has years of retail experience, said, “Retail is one of the easiest industries to get into after matric. When you’re looking for a job‚ in most cases‚ retail would be the first to welcome you into the working field. So I think that’s the first option that people go for.”

With a six-day work week‚ averaging eight hours a day‚ Kok spends about 48 hours a week at work. Most of these hours are spent on her feet. “The only rewarding thing I would say is seeing your customers happy and pleased with the service you have given them‚” she said‚ suggesting there was not a lot of financial gain with the job.

60 hours a week

The OECD said nearly 12% of the South African workforce spent more than 60 hours a week on the job. This is despite SA’s labour laws prohibiting more than 45 hours a week and no more than 10 hours in overtime.

Quoting research from the Stellenbosch University’s Bureau for Economic Research‚ the OECD said men worked the hardest. “SA’s hardest workers are black men younger than 45 in a semi-skilled occupation and lucky enough to have a permanent job in a country with high unemployment.”

The study said women were more likely to work shorter hours‚ because they “tend to be more educated and work in the professional sector”.

But knocking off from work does not necessarily mean they are over for the day. For many women‚ leaving work means the beginning of another task — housekeeping.

“South African women without a housekeeper spend 183 minutes a day on housework‚ as opposed to 75 minutes for men. Women living with children also spent an average of 87 minutes a day taking care of them‚ compared to men‚ who spent seven minutes‚” the OECD said.

Working hours were shorter in more economically thriving provinces such as Gauteng and the Western Cape. These provinces had a high concentration of highly skilled workers.

According to the report: “The average working hours in these more affluent provinces is affected by migration from other provinces. The Eastern Cape also had some of the lowest working hours‚ but that was because so few people had permanent employment in the impoverished province.”

November retail sales data surprised market expectations with an 8.2% year-on-year increase, the strongest performance in five years.

According to FNB senior economic analyst Jason Muscat, Black Friday, during the last week of November, helped lift sales in the sector.

Sales were higher than the 3.5% year-on-year sales recorded for October, according to data released by Stats SA on Wednesday.

“This was the strongest year-on-year performance in five years,” said Muscat. Month-on-Month sales for November were 4% higher, compared to a -0.1% decline for October and -0.4% recorded for September.

“The figures should be viewed as transient in light of significant buying during the ‘Black Friday’ month, and in the context of relatively lacklustre trading updates from many domestic retailers.”

Muscat said that the figure shows that consumers and retailers are still constrained. Retailers are forced to introduce deep discounts to drive revenue, while sacrificing profit, and consumers are making use of the opportunity to save.

“Nevertheless, the sector is on track to make a significant, positive contribution to both fourth quarter GDP and full year 2017 GDP.”

Muscat said that a moderation in the retail sales data for December is expected. There will also likely be a contraction in the sales data for the first quarter of 2018, coming off the exceptionally high data reported for the fourth quarter.

Investec economist Kamilla Kaplan is also of the view that there may be weaker sales growth reported for December, especially as the Bureau of Economic Research Retail Survey for the fourth quarter showed that the retail sector’s performance during the festive period was not as expected.

The highest growth was reported for other retailers at 20.8%. This includes book stores, jewellers, sporting goods and second-hand goods. Retailers of household furniture, appliances and equipment reported growth of 14.1% and retailers of textiles, clothing, footwear and leather goods reported growth of 12.4%.

The main contributors to the 8.2% increase were general dealers, having contributed 2.6 percentage points, textiles, clothing, footwear and leather goods with 2.3 percentage points, and other retailers which contributed 2.2 percentage points.

Stefan Sulzer, partner and managing director at Boston Consulting Group, said at the end of 2017, the overall economy was in a fragile state as a result of factors such as appalling business confidence, political uncertainty ahead of the election of the new ANC president, as well as high unemployment.

Consequently, it was expected that all of these factors would culminate in constrained consumer consumption.

“However, the overall development of the retail sector was strong, following suit with the previous months. Amongst other factors, this was fuelled by significant promotional activity by retailers in SA,” said Sulzer.

“Based on the most recent retail figures, we can conclude that Black Friday 2018 was bigger than the previous year. It will now be interesting to see what momentum the retail sector carried into the arguably more important December 2017 trading period.”

Source: Supermarket & Retailer

The tech reckoning – and other trends for 2018

Technology is driving exponential growth and mind-blowing innovation in all areas of life, all around the world.

The tech reckoning 

Certainly, in recent years there have been concerns about rapid changes to our culture and questions about people’s ability to keep pace with those changes. But we have now lived with this generation of consumer technology long enough to all begin seeing very real downsides.

– Facial recognition and other biometrics amp up already serious privacy concerns

– Facebook and Twitter have failed to earn public trust. They’ve failed to police their platforms, letting cyber thugs in to divide the nation and affect an election. Not to mention an avalanche of extremist and offensive postings still finding their way online, despite claims of corrective action by the tech giants.

– Tech ethicist, Tristan Harris, schooled us on the addictive properties of social media, and how we are being controlled by a steady drip of “likes” and retweets — just enough to keep us hooked.

– Some research has shown that depression in teenagers is skyrocketing due to mobile phone use and social media influence.

– Alexa and Google Home are always listening—during a party, at dinner, or even in an argument with your loved ones! The possibility that voice data can be used in court as evidence is going to be the next big hurdle for these products. Where does your privacy begin and end?

– The big five – Facebook, Amazon, Microsoft, Google, Apple – (FAMGA) have grown beyond all expectations and are coming under increasing scrutiny for all manner of business, political, and social practices. Coming face to face with a world they didn’t intend to create, Silicon Valley has created its own retreat — disconnected from the billions of “users” they court — in order to reflect on what they wrought.

What this means for business

According to Edelman’s 2017 Trust Barometer, trust has imploded, reaching an all-time low. Their latest report shows that “85% lack full belief in the system, this belief increases vulnerability to fear and further distrust.”

This is the climate we are in now. Brands, business, boards should take note that this sort of disillusion bleeds over into multiple categories putting loyalty, revenue and brand image at risk.

Retail singularity

The gravitational pull of Amazon continues to challenge all of retail as they struggle to innovate and morph to keep their businesses and customers from being swallowed into the void.

– Just when e-commerce looks to be the only channel, “Spending growth at mom-and-pop businesses has outpaced that of the big chains in the past 2 years”

– “Companies using print catalogs, cut through email clutter social-media saturation to help differentiate brands, sustain existing customers”

– Stores are finding new life as community spaces with live events attracting “Millennials focused on connection and community”

– Bricks and mortar are re-emerging from the black hole of e-commerce. Bonobos and Warby Parker opened physical stores over the last year and now Everlane has just announced 2 new stores. CEO Michael Preysman said “Our customers tell us all the time that they want to touch a product before they buy it. We realized we need to have stores if we’re going to grow on a national and global scale.”

– Technology continues to create amazing in-store experiences for shoppers with VR and AR.

– AI is helping us find the right clothing for every size. Among the many new developments is Start Today USA with their ZOZOSUIT that captures 15,000 measurements so you can confidently order the right size and fit from ZOZO.

– Those dash buttons will probably change into auto-replenishment, subscription services will become even more valuable as they get to know each customer better, and hotels are going to be IoT showrooms answering our every need at a mere mention.

– Micro-leases are the new legal offering that will fill empty spaces with new startups, seasonal, or experiential offerings.

What this means for business

As if Amazon weren’t threat enough, the industry-blurring mega-mergers of Amazon/Whole Foods and CVS/Aetna has more than retailers paying attention. Every big brand should be thinking about how they can be the business that responds to the entire consumer journey — or risk being eaten up by a business that will.

One thing to remember about change is that even though technology is the new shiny thing, people are still your audience and their need for personal attention, products just for them, fun sensorial experiences, confidence in their purchases and authentic community will never, ever go away. Those retailers that can keep innovating around those evergreen consumer desires will eventually win out.

By Mary Meehan for Forbes 

A new era of retail is coming

On October 25 of this year — on an otherwise quiet day in retail news — Nike chief executive Mark Parker fired a reverberating shot across the bow of the entire retail industry.

He announced that out of Nike’s global universe of more than 30,000 retail partners the brand would, going forward, focus its time, attention and capital on forty — FORTY — retailers that Nike calls “strategic wholesale partners.” Partners, he explained, which are willing and able to build out unique and dedicated Nike spaces within their store environments.

With this one brief announcement, Parker had not only given tens of thousands of merchants around the world a Tony Soprano-style kiss on the cheek, but he’d also made the same sweaty-palmed decision that thousands of other brand CEOs secretly wrestle with on a daily basis: whether to abandon the intoxicating volume of the mass market in a sober effort to save their brands from almost certain ruin.

Barely a quarter goes by that I don’t speak with at least one brand executive awakening to the reality that the reach, ubiquity and market penetration that hyper-retailers, department stores and discounters once offered is now the very thing that is siphoning equity from their precious trademarks. The power-merchants that made these brands household names were now the very things rendering them commoditised hostages in a high-speed chase to the bottom. Once the salvation of many a fledgling brand, mass merchants have increasingly become like kryptonite. In a world constantly seeking what’s next, new or special, mass retail has become toxic in its overexposure. For consumers, to whom shopping experiences matter as much, or more, than products, mass merchants are bringing nothing to the table.

Nike is merely one in a growing list of labels rethinking their distribution strategies. Earlier this year Coach announced it would leave the floors of over 250 department stores. Michael Kors also made a similar decision. And high-end outerwear brand Canada Goose, a brand that has traditionally been sold through wholesalers, now has a long-term goal of generating at least half its profits from its direct-to-consumer business. One by one, brands are fleeing the mass market and their absence will weigh heavily on all mass merchants.

However, more important in Nike’s announcement was the bold declaration that only one tenth of one percent of their retailer network — those retailers who could deliver on the brand promise and experience — were even worthy of the brand’s time and attention. The remainder of Nike’s resources, according to Parker, would be dedicated to growing the brand’s direct-to-consumer business through its owned stores and websites, which currently represent about 30 percent of Nike’s total sales.
In a world constantly seeking what’s next, new or special, mass retail has become toxic in its overexposure.

This is by no means a minor shift. In fact, what it portends is a complete reformation of the retail market and a breakdown of the wholesale-retail model for revenue.

Where today the retail market is largely divided by luxury, mid-tier, and discount, the coming decade will see the market more clearly bifurcate into two distinct retail approaches. The first will encompass an ever-swelling number of vertically-integrated brands that focus on serving individual consumers at scale and in a manner that best befits the brand. The second will be a new class of “experiential merchants” that use their physical stores and online assets to perfect the consumer experience across a category or categories of products. They will define the ideal experiential journey, employing expert “product ambassadors” and technology to deliver customer experiences that are truly unique, remarkable and memorable. So memorable that they leave a lasting, positive experiential imprint on the shopper’s psyche.

The solitary aim of these new-era retailers will be to drive significant sales for their brand partners. But unlike stores of today that are single-mindedly focused on four-wall sales, experiential stores of the future will position themselves as true any-channel hubs. They will serve customers through multiple means of fulfilment that will include their own channels as well as direct-to-consumer sales from their brand partners. Attribution for these sales will matter less than delivering the powerful shopping experience responsible for generating them. And for this, brands like Nike will reward experiential merchants handsomely — not simply with conventional product margin but also with upfront media and agency fees. These experiential merchants will, in essence, be media channels and will be earn revenue as such. Brands like Nike will not be their vendors but rather their clients.

Taken in this context, Nike’s announcement on October 25, 2017 was a profound harbinger of a tectonic shift in the industry. One of the world’s largest brands was not merely communicating a new brand strategy but more clearly than ever before, foreshadowing an entirely new and revolutionary era of retail.

Doug Stephens for Business of Fashion

While some retailers managed to draw crowds and lines on Thanksgiving Day with Black Friday sales, other stores remained almost eerily empty as the holiday-shopping season kicked off.

However, that may not necessarily be bad news for companies banking on a profitable holiday season. On Thanksgiving Day, people spent $2.9 billion online, according to Adobe Analytics.

Here’s a look inside the shockingly empty stores this Black Friday.

Quite a few Targets seemed surprisingly empty, The Street’s Brian Sozzi noted.

“Hmmm not what I expected,” the reality-TV star Tamra Judge posted on Instagram after visiting a Target in California. “First time ever Black Friday shopping. I was so excited to fight the crowds.”

Part of the reason for empty stores could be chalked up to Black Friday sales kicking off on Thanksgiving Day.

As one commenter on Judge’s Instagram post put it: “That ’cause that crowd was there yesterday at 6pm!!! They are all sleeping now.”

However, many shoppers may simply be shopping online instead of visiting physical stores.

Target said on Friday that it had received more than three times the number of orders through its Order Pickup service than it did on Thanksgiving last year — which could explain the empty stores.

Some Best Buys seem to be facing a similar situation.

Though crowds lined up outside the retailer on Thanksgiving, Black Friday seems more tranquil — at least at some stores.

There were also empty Walmart locations, as well as some empty Big Lots.

Shoppers spent $2.9 billion online on Thanksgiving — a 18% increase over last year, according to Adobe Analytics.

Shoppers are expected to spend $107.4 billion online this holiday season, which would represent an increase of nearly 14% over last year, according to Adobe.

By Kate Taylor for The Independent

New venture may shake up shopping malls

Steinhoff Retail Africa, along with partner Shoprite, is set to disrupt the retail market, if they implement plans to own shopping centres.

Shoprite CEO Pieter Engelbrecht said this week: “If you look at all the brands that are currently in the company [Steinhoff] and you add ours, they could be opportunities in real estate where we could open shopping centres just with these brands on their own.

“Once we’ve combined we’ll make such a decision. But it could be a possibility because the combined value of real estate is huge between Shoprite and all these brands within Steinhoff Africa,” said Engelbrecht.

The creation of Steinhoff Africa Retail, known as STAR, will include Steinhoff’s African assets such as Ackermans, Poco South Africa, JD Group, Timbercity and men’s apparel retailers Dunns and John Craig, Pepkor South Africa and rest of Africa, and Tekkie Town, to name a few, and will result in Steinhoff acquiring a 22.7% stake in Shoprite.

Lucrative opportunity

Given the close relationship between Shoprite and Steinhoff, a move to combine the two groups’ own shopping centres could also mean Shoprite’s grocery brands, such as Checkers, Usave, Liquorshop and fast food brand Hungry Lion, could take up space in these shopping centres.
Engelbrecht added that because there was quite a big mix across the two groups, including furniture, food, liquor, pharmacies and electronics, this could be “quite a lucrative opportunity to explore”.

Earlier this month Steinhoff announced the details of the listing of its African and European assets into two companies, which would be listed separately.

This deal comes after a previous attempt to merge the two groups had failed. Under the new transaction, Engelbrecht said, it had panned out that Shoprite would stay “autonomous” and separately listed.

“For us that’s also more exciting as we as management believe that we should operate independently.”

But combining their brands in shopping centres could be one way to extract synergies and savings for Shoprite.

Keillen Ndlovu, head of listed properties at Stanlib, said “rental as a percentage of turnover and sales has been going up particularly in the bigger shopping centres. The bigger centres have been able to attract higher rents over time but unfortunately, the higher rental growth has not been catching up with sales and turnover growth.”

Slowing sales

This meant the cost of occupation for retailers had been rising with the average cost of occupation at 10% of sales as at the end of December 2016 from 8.5% as a percentage of sales between 2004 and 2016, Ndlovu said.

“Given the slowing sales and economic environments in general, this is likely to make it harder for landlords to bargain for rental increases from retail tenants. Therefore, rental growth is likely to slow down,” he said.

For Shoprite’s full year to end-July 2017, the cost of new operating leases rose 9.6% to R3.8-billion from the R3.5-billion in the previous quarter, “mainly due to a net 109 new corporate outlets opened during the year”, the company said.

And for the group that is focused on letting every rand fight for its life, a reduction in costs in the current trading environment will be welcome.

“We must drive our own strategic focus to create value for shareholders, but wherever there are synergies or saving or opportunities that we can share with the STAR group we will not be adverse to it at all,” Engelbrecht said.

Source: Business Live

Back-to-school season has long been a critical sales event for retailers, but 2017 may go down as a year that defies the trends as shoppers play a waiting game for sales.

Kids started back to school this month, but as of early August just 45% of shoppers have checked everything of their list, according to the National Retail Federation’s annual survey conducted by Prosper Insights & Analytics. It’s the lowest number since 2012.

However, 2012 was a record year for back-to-school spending as shoppers indulged in pent-up demand following the spending lull of the Great Recession. In all consumers shelled out a whopping $83.8 billion, according to NRF that year and are projected to spend $83.6 billion in 2017, up more than 10% from 2016.

And 2017 is off to a slow and worrying start. Many began early, according to NRF, researching needed items, perusing online class lists and comparing prices. But traffic has slowed in August and it’s anybody’s guess if it will pick back up.

What are shoppers waiting for? Discounts, suggests Prosper Insights & Analytics (and fellow Forbes contributor) Pam Goodfellow. This trend follows that of the winter holiday season, where consumer play a game of chicken with retailers, waiting and watching prices drop as the deadline gets closer.

In this regard, back-to-school 2017 could be a preview for the holiday season to come. Already, early reports indicate retailers could have a banner winter holiday season, particularly when it comes to e-commerce, where sales are projected to rise some 16.6%, according to eMarketer.

“People are confidently spending more and really spreading out their shopping throughout the season,” Katherine Cullen, director of retail and consumer research at NRF, told Retail Dive in an interview. The association still expects spending to be higher in aggregate this year than last, but with so many waiting, back-to-school is beginning to look a lot like Christmas.

By Laura Heller for Forbes.com 

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