Tag: spend

What South Africans bought this Black Friday

Black Friday 2020 sales volumes in South Africa were higher than last year, but the growth was far lower than expected.

The follow are highlights of the day:

  • 2020 was very different from previous years, as purchasing activity did not start at midnight
  • Sales volumes after midnight were down 33% while there was 63% less spending during this period. Volumes started to pick up at around 08:00
  • There were surges between 08:00 and 09:00, and 19:00 and 20:00. These were more impulse buying, with high volumes but far lower basket values
  • Black Friday as a whole saw an increase of 14% in sales volumes, much lower than the expected 35% growth
  • There was a 400% increase in sales when compared to a typical weekday
  • The most popular item was the air fryer, with disposable face masks coming in second
  • Dishwashers were among the most popular appliances
  • Takealot’s more traditional top sellers were Samsung and Hisense TVs, the PlayStation 4 console and 3 Game bundle, laptops, wearable tech such as the Garmin Fenix 6X Pro Sports Watch and Apple AirPods Pro
  • In Massmart stores Makro and Game, top sellers were 25-litre cooler boxes, Smart HD TVs, Raleigh bicycles, rechargeable lanterns, fridge/freezer combos and kettles
  • Makro shoppers who opted for the Click and Collect option did so not to avoid a trip to the store, but to reserve highly desirable products. When they collected the product in store, they shopped more.
  • BankServ Africa’s preliminary tally of Black Friday transactions shows total in-store card purchases numbered 4 967 022 (30% down from 2019)
  • Online sales reached 868 903, which was 62% up on 2019’s figures
  • 95% of payments were done through credit and debit cards, dwarfing EFT

Karen Nadasen, PayU South Africa CEO, puts the lower-than-expected growth and low midnight sales down to a few factors:

  • The big Black Friday deals expected at midnight did not materialise
  • There were many retailers which only put their deals up in the morning
  • There was a big decline in airline ticket sales, which typically account for large Black Friday volumes

Image credit: Thapelo Morebudi/Sunday Times

Source: Supermarket & Retailer

The global retail sector is in an unprecedented state of flux and as the end of the year approaches, Nielsen has identified a range of evolving consumer groups as well as four Holiday/Festive consumer behavioural resets related to this crucial holiday period.

Nielsen Retail Intelligence MD for Sub-Sahara Africa Kelly Arnold comments; “As the end of the year approaches, upcoming festivities are going to look very different for consumers depending on where they live, what restrictions they face and how COVID-19 has changed their spending habits. However, the reality is that the ‘golden quarter’, the crucial holiday trading period is already underway and with the continued spread of the virus and ongoing restrictions, this year’s festive period will be unlike any other.

Evolving consumer groups

Against this backdrop Nielsen has identified five different consumer groups that indicate how financial and physical restrictions could manifest leading up to the festive season:

  • Constrained and restricted consumers have suffered income loss as a result of COVID-19 and have less money to spend and also have less freedom to physically congregate and shop for their holiday needs due to local restrictions to travel, business openings and social interaction. As a result of limited physical shopping, they may have less opportunity to shop around for the best deals and assortment.
  • Constrained but free consumers have also suffered income loss and are likely to have a savings mindset as they prepare for the festive season but because they have no physical restrictions, they will have more freedom to celebrate with others and to seek the right products and price points to suit their needs.
  • Cautious middle consumers have not yet been impacted financially and their celebrations are not limited by local physical restrictions. They are more likely to be cautious spenders and may prioritise occasions and gift giving with only those closest to them.
  • Insulated but restricted consumers have not been financially impacted by COVID-19 but festivities will be impacted by local physical restrictions. Smaller gatherings may curtail normal spending and encourage self-indulgent celebrations. Financial flexibility will drive these consumers to splurge in some ways to compensate for experiences that are no longer possible (e.g. travel).
  • Insulated and free consumers have also not been financially impacted by COVID-19. While their social interactions may not be restricted, their typical celebrations may be affected by those unable to be with them this year. These consumers are likely to spend the most freely and to exhibit pre-COVID-19 holiday behaviour.

New purchase behaviours

To help chart the behaviour of these consumers, Nielsen has also identified four emerging patterns to help predict the drivers of pandemic purchase decisions in future. When applied to the context of the many upcoming holidays and year-end festivities, these reset patterns now highlight some important new behaviours that could emerge this season:

  • Basket reset – holiday spending and gifting will be refined based on what and who are considered essential for each consumer. This will require retailers and manufacturers to redefine what’s festive and capitalise on the broadened assortment of what consumers might consider “giftable” this year. From a necessity that can no longer fit the budget, to a product that has been harder to get in stores this year, there will be big shifts in what defines a “gift”.
  • Homebody reset – gatherings will be smaller and more intimate with many planned at the last minute. This might see the introduction of so-called ‘Single-Serve Celebrations that cater to needs for convenience, health and budget consciousness by offering serving sizes and packages conducive to small or socially distanced gatherings.
  • Rationale reset – consumers will spend more on themselves, prioritising self-care this year. Retailers might then look to engage with empathy and recognise the trade-offs consumers will need to make. There is also scope for just-in-case solutions that cater to consumers who may be waiting to see whether they are able to physically celebrate a festive occasion or not.
  • Affordability reset – online shopping will power more holiday consumer behaviours than ever before creating a need to convert impulsivity. With limited physical touch-points with consumers, it’ll be vital to create spontaneity, even in an online environment.

Within this new Festive framework Arnold points out: “It’s clear that celebrations are going to look very different for many consumers depending on where they live, what restrictions they face and how COVID-19 has impacted their purchasing power. Despite the diverse global spectrum of holiday celebrations, COVID-19 has forced many consumers to re-think their holiday plans in similar ways, based upon known levels of virus-related constraints and this will have far-reaching consequences for both brands and retailers.”

SA festive spend predicted to hit over R250bn

Source: Supermarket & Retailer

Research by short-term lender, Wonga, has revealed that South Africans will each incur an average of R6 585 in festive expenses this summer, over and above their usual budgeted expenses.

Based on Statistics SA’s mid-year population size estimates, working aged South Africans are set to pump R254-billion into the economy, an increase of 24% from last year.

As part of Wonga’s Festive Spending Survey, almost 6 000 South Africans shared what they plan on doing these holidays, who they plan on doing it with and how much they intend to spend.

“Our research revealed that 60% of people think they’ll spend more this festive season than they did in 2018, despite the tough economic climate. However, rather than turning to debt, the majority have either saved throughout the year or plan on using their end of year bonuses to manage the extra expense,” explains James Williams, Head of Marketing at Wonga.

This is Wonga’s second annual Festive Spending Survey and, when compared to last year’s findings, reveals that South Africans intend on spending an average of R880 more than they did last year. This includes costs such as gifts, holidays, entertainment, transport, food and drink.

Festive budgets

The research revealed that 76% of South Africans spend more than usual over the festive season, with food and drink taking up 37% of most budgets at an average cost of R2 430 per person. This is followed by gifts which account for approximately 20% of festive budgets, with South Africans forking out over R1 200 to spoil their loved ones.

In total, respondents expect to spend an average of R6 585 each, which is almost half (46%) of the average South African’s ‘take home pay’. This is based on Bankserv Africa’s latest index, according to which South Africans take home an average of R14 385 each, after tax. This represents a significant increase from 2018, when festive budgets made up just a third of the average ‘take home pay’.

Half of the respondents indicated that they dislike the pressure to spend money over the festive season. To cope with the extra expense, the majority (45%) plan to draw from their end-of year-bonuses, or dip into their savings (42%) or stokvels (25%). Only a small portion plan on either taking out a loan (17%) or spending money on their credit cards (11%) to get them through the holidays.

Travel plans

Only one in three South Africans have festive season travel planned this year, a 5% drop from 2018, with most people (33%) citing the cost of travel as their main reason for staying home followed by work commitments (27%).

Of those leaving home for the holidays, Durban emerged as the most popular holiday destination for the second year running, followed by Cape Town. Most people (58%) will be travelling to visit family or friends, with only a small portion visiting places because they offer peace and quiet (17%) or natural beauty (12%). The bad news for those hoping to avoid traffic chaos this year is that the vast majority (60%) plan on travelling by car.

Festive gifting

Nine in ten South Africans plan on buying gifts this festive season and, while the majority (83%) plan on spoiling their family, 22% also plan on buying themselves a gift this Christmas. At the top of most people’s Christmas lists, money (34%) and vouchers (26%) emerged as the firm favourites again this year.

Although the popularity of traditional stores has declined by 6% since 2018, 75% of shoppers still prefer to visit brick and mortar stores in search of gifts, with only 13% planning to do their shopping online.

Festive celebrations

78% of South Africans’ favourite way to celebrate the festive season is by spending time with loved ones. Having a braai emerged as the most loved festive tradition for 47% of respondents, making it 10% more popular than a traditional Christmas roast.

Only 57% of South Africans have work parties or functions planned to mark the end of the year and the vast majority look forward to celebrating with their colleagues. However, for 18% this excitement is replaced with indifference either because they find their year-end functions boring (35%), don’t enjoy socialising with their work mates (20%) or resent having to spend money on gifts, clothing or food for the occasion (24%).

“It’s clear that most South Africans have a bumper festive season planned and, while it’s great to see so much holiday cheer, people should be careful not to get swept away in the excitement and wind up spending more than they can afford. Remember, the best gift that you can give to yourself and your loved ones is starting the new year on a strong financial footing,” concludes Williams.

Quick facts:

  • Festive spending to increase by 24% this year, with South Africans budgeting an average of R6 585 each over this period.
  • Just under half of working South Africans rely on a thirteenth cheque or bonus to tide them over the festive season.
  • Two thirds of South Africans won’t travel this festive season, with most claiming it is too expensive.
  • 50% of South Africans don’t like the pressure to spend money during the festive season.
  • Durban is still the most popular holiday destination amongst South Africans.
  • Despite the popularity of traditional shops dropping by 6% from 2018, 75% of South Africans still prefer brick and mortar stores to buying Christmas gifts online.
  • Money and vouchers remain the most popular gifts for 60% of South Africans.
  • South Africa’s favourite way to celebrate the festive season is with their family and friends.

Source: Supermarket & Retailer

Data shows that 2 out of 3 South African consumers participated in Black Friday shopping at some point, according to Isana Cordier, sector head for consumer goods and services, corporate and investment banking at ABSA.

ABSA card data indicates that, on average, every last Friday of the month consumers spend about 55% of purchases on groceries.

On Black Friday, however, this changes and durable goods make up about 20% of purchases.

“It, therefore, seems that consumers are holding back spending on those durable items to buy them on Black Friday. South Africans especially like to spend on electronics on Black Friday,” Cordier said at a recent consumer insights event hosted by ABSA in Cape Town.

Black Friday has become the biggest spending day of the year in the SA retail sector, with more than R3bn spent last year.

Another interesting trend for her is that, whereas Black Friday shopping in SA was initially mostly centred around Gauteng and the Western Cape, the “frenzy” has started to spread to other provinces as well.

For instance, the Eastern Cape now makes up about 7.2% of Black Friday spending in SA, KwaZulu-Natal 14.2% and the Free State 4.1%. Gauteng still accounts for 37% of spending in SA on Black Friday.

Fin24 reported last year that retail sales over the Black Friday and Cyber Monday period most likely “saved” the South African economy in November, according to the BankservAfrica Economic Transaction Index (BETI).

On Black Friday and Cyber Monday, a total of 5.2 million card transactions were recorded.

More significantly, according to the BETI report, there was 55% growth in online sales for Black Friday and 36.4% for Cyber Monday.

Google poured billions into its business in 2018

By Julie Bort for Business Insider US

Google doubled its capital expenditure spending in 2018 to R344-billion, which included spending on offices and tech infrastructure.

Its cloud unit also got the lion’s share of new hires in the quarter, the CFO of parent company Alphabet said.

Google’s cloud computing efforts were a mixed bag in 2018 but the company on Monday said that it invested heavily in 2018, and will continue do so in 2019, albeit maybe not at the same pace.

During its year-end earnings report on Monday, Google revealed that it doubled its capital expenditures in 2018, to R344-billion, up from R168-billion in 2017. The hefty spending went towards everything from new office facilities to accommodate Google’s growing workforce to bolstering its infrastructure such as datacenters and servers.

It’s tough to say exactly who much of that capex went towards Google’s cloud business specifically, but the company has made it clear that investing in the cloud is a priority. Google said it launched its 18th Google Cloud region in the fourth quarter and pointed to plans for continued expansion in the US and abroad.

In comparison, Amazon spent R151-billion cash on capex in 2018, split between fulfillment operations (like warehouses) and AWS, it said. And Microsoft said it spent R214-billion.

Google also hired madly for its cloud unit, with more than 4 000 new hires in the final three months of the year. “The most sizeable increases were in cloud, for both technical and sales roles,” Alphabet CFO Ruth Porat said during the conference call.

Porat noted that spending on talent and equipment will continue in 2029, though the pace will cool off compared to 2018. Capex, she said, will “moderate quite significantly.”

How does Google’s cloud business compare?
Google is spending to catch up. Revenue from its cloud business lags Amazon Web Services and Microsoft, although Google does likely have a multibillion cloud business. It’s a bit tough to tell because Google doesn’t break out cloud revenue. It lumps it in its “other” category which also includes the revenue it makes from its Google play app store and its hardware devices like Google Home.

That “other revenue” category was R8-billion in the fourth quarter of 2018, up from just under R66=billion for the year-ago quarter and a sizeable portion of that is generated by its app store. Google noted on Monday that the number of Google Cloud Platform deals worth more than R13 million more than doubled in 2018 and that it ended the year with more than 5 million paying customers of its cloud productivity tools, but otherwise offered little new information by which to measure the size of its Cloud business.

For comparison, AWS generated R99 billion in net cloud sales for Amazon in the fourth quarter.

Microsoft also doesn’t disclose specific revenue figures for its cloud, Azure, so a direct comparison here is even harder to noodle out. The unit that includes Azure is called “Intelligent Cloud” and it generated R125 billion in the same quarter. However, despite putting “cloud” in the unit’s name, that unit includes a lot of classic software products, including Microsoft’s popular database and Windows Server, its operating system for servers. Those are both older, massive businesses compared to Azure and are not what anyone would consider a cloud service.

Most market experts believe that AWS is way ahead. One researcher, Synergy, puts AWS at 40% market share in cloud.

Keep an eye on the new boss
Of course the big news for Google’s cloud efforts in 2018 was its change of leadership. Near the end of 2018, Google board member Diane Greene left. Google hired Thomas Kurian to replace her. He left Oracle where he helped build Oracle into a database and applications giant during his decades there, and then lead Oracle’s cloud efforts. Oracle’s cloud is growing quickly by internal metrics as it moves its customers from buying its software to renting its software on its cloud. But Oracle’s cloud is not exactly taking the tech industry’s breath away, so his performance at Google Cloud will be a test for him and the company.

There’s been a lot of speculation about whether Kurian will embark on an acquisition spree to help Google’s Cloud catch up with the competition. Google CEO Sundar Pichai kept mum on Monday when asked about any potential big deals or changes in strategy under Kurian. Pichai spoke of “continuity” and focusing on the parts of the business where the company is seeing good returns.

Even with all the shrouding of investment and financial results, the cloud industry is often considered a three-player race, with Amazon in the lead, Microsoft on its heels, Google in third and a variety of players, from Alibaba to IBM to Oracle, in the chase pack.

Shoprite records gloomy Christmas sales

By Robert Laing for Business Live 

Shoprite’s share price fell as much as 5.7% to R175.32 after it warned shareholders its interim results would show flat sales.

Joining the queue of JSE-listed retailers reporting disappointing Christmas sales, Shoprite said its total group sales declined 0.3% in the December quarter, the second of its financial year.

The drop in sales in December quarter followed just 0.42% growth in the September quarter, which Shoprite blamed on teething glitches in a new Gauteng distribution centre and strikes.

Shoprite is scheduled to release its interim results on February 26.

“Liquor stores remain a standout performer with 20.09% sales growth for the period,” CEO Pieter Engelbrecht said in Tuesday’s operating update.

“The group’s core business, Supermarkets RSA, achieved 2.58% sales growth for the period. Persistently low internal food inflation in SA of only 0.2% for the period marks 18 months of near stagnant prices of basic foods in which the group has a larger market share,” Engelbrecht said.

“The core Shoprite middle income consumer base remains under pressure. This was evidenced in Christmas sales in categories such as back-to-school essentials, which outperformed traditional discretionary purchases such as toys for the first time.”

How SA climbed its way out of a recession

By Lameez Omarjee for Fin24

The SA economy has officially emerged from recession, Stats SA announced on Tuesday morning, following a 2.2% rise in GDP growth for the third quarter of the year.

The economic growth figures were broadly in line with the expectations of economists surveyed by Fin24 prior to publication, who had projected growth rates of between 0.8 and 2.6%.

The rand firmed by as much as 1% shortly after the release of the results.

However, despite the rebound, economists still expect overall GDP growth for the year to be weak, below 1%.

Here’s what boosted growth in the third quarter:

1. Manufacturing industry expands

Growth was mainly driven by the secondary sector, which grew by 4.5%. This was aided by a 7.5% increase in manufacturing. Large contributions came from steel and metals, and motor vehicle production, among other things.

2. Agriculture rebounds

Even though the primary sector contracted by 5.4% in the quarter – mainly due to a large drop in mining – the agriculture industry rebounded following two quarters of substantial contractions.

During the third quarter, increased production in field crops, horticultural and animal products, helped improve growth to 6.5%.

Earlier on Tuesday, Bloomberg reported that confidence in the industry had declined to its lowest in nine years. The agribusiness confidence index dropped from 48 to 42, mainly due to concerns over weather conditions and a lack of clarity on land reform policy.

3. Transport industry rebounds

The tertiary sector grew by 2.6% during the quarter. The transport, storage and communication industry in particular expanded by 5.7%, rebounding from a -4.9% contraction in the second quarter and improving from 0.9% growth reported in the first quarter.

4. Finance, real estate and business services continue growth trend

Also within the tertiary sector, the finance, real estate and business services industry continued its growth trend, increasing by 2.3% during the quarter.

Additionally, the trade industry – particularly wholesale, retail and food and beverages – and catering and accommodation increased by 3.2%.

5. Expenditure-led growth

Expenditure GDP grew to 2.3%, following a decline of -2.6% and -0.7% reported in the first and second quarters respectively. Government expenditure grew by 2.2%, while household expenditure grew by 1.6%.

However, gross-fixed capital formation declined -5.1% during the quarter, largely due to a decline in investment in construction works, transport equipment and residential buildings, according to the StatsSA report.

Global spending on 3D printing hit nearly $11-billion in 2015, according to International Data Corporation (IDC). By 2019, that figure will surge to nearly $27-billion.

The IDC’s “Worldwide Semi-annual 3D printing Spending Guide” forecasts a 27% compound annual growth rate (CAGR) from 2015 to 2019, when worldwide spending on 3D printing is expected to hit $26.7-billion. More affordable 3D printers and 3D printing materials are credited for the industry’s growth in the past three years.

Asia-Pacific, the US, and Western Europe are expected to increase their combined share of global spending on 3D printing from 59,2% in 2014 to 70% by 2019, according to IDC. China is projected to become the leading market for 3D printing hardware and services.

Through the first three quarters of 2015, worldwide shipments of 3D printers rose 35% year, according to data from IT market research company CONTEXT, cited by investment research firm Morningstar.

“Of the total 173 962 units shipped year-to-date, 95% of these were personal/desktop printers, mostly priced below $5 000,” according to the firm. This reflects a 38% year-over-year growth for this subcategory of the industry. The industrial/professional segment, however, declined 3%.

Taiwan-based XYZprinting was the leader in the desktop/personal printer space through the first three quarters of 2015, boasting a 17% global market share. 3D Systems (12%), Stratasys (9%), Ultimaker (9%), and M3D (9%) rounded out the top five.

By Jason Hahn for www.digitaltrends.com

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