NIQ South Africa’s State of the Retail Nation highlights a 3.4% growth in retail sales for 2024, driven by price increases amid economic challenges. The FMCG sector saw significant spending, while the T&D market struggled due to telecom saturation. Retailers must adapt to consumer demands for value to thrive moving forward.
The latest analysis from NIQ South Africa, titled “State of the Retail Nation,” reveals a marginal increase in retail sales over 2024, despite a robust festive season. South African consumers collectively spent approximately R637 billion on fast-moving consumer goods (FMCG), reflecting a modest growth of 3.4% year-over-year primarily driven by price hikes rather than increased consumption.
The Technology & Durables (T&D) sector reported minimal growth, with a mere 1.8% increase in sales value, amounting to R90 billion. This segment’s overall performance was adversely affected by a 2% decline in the telecoms sector, the largest category, which represents over half of the T&D market’s worth. Notably, washing machines displayed consistent monthly growth, achieving a 16% increase in both sales value and units sold.
Zak Haeri, Managing Director for NIQ in South Africa, commented on the prevailing economic conditions, stating, “Despite much-improved consumer sentiment… retail recorded only moderate gains in sales during 2024.” He highlighted that escalating unemployment and living costs are compelling consumers to prioritize value during their shopping experiences.
In 2024, South African consumer spending included R359 billion on food and liquor and R278 billion on various other goods. The private label brands saw significant success, achieving a sales growth of 7.1%, with total sales reaching R98.7 billion; they thrived due to wider category appeal and a focus on cost efficiency. The fourth quarter also recorded a notable growth of 4.8%, primarily in liquor and personal care items.
Haeri noted, “Consumers are still focusing on essential spending… to stretch their rand further,” indicating that macroeconomic trends are influencing purchasing behaviors. While many are opting for bulk purchases to save costs, some consumers have shown an inclination towards premium products.
Despite an initial surge in Black Friday sales, the T&D sector experienced disappointment owing to market saturation in smartphones and slowed upgrade cycles. The IT segment and domestic appliances, however, saw growth, which was not sufficient to offset losses in telecom sales, which constitute a significant portion of the T&D market.
Notably, during the fourth quarter, pricing in the telecom domain saw a decrease of 9%, encouraging broader consumer engagement with discounts. The T&D sector celebrated its highest Black Friday figures, bolstered by robust online sales, which rose by 9%.
Looking ahead, Haeri foresees potential challenges, including VAT increases and global trade uncertainties. He emphasizes that retailers must maintain a balance by providing value through rewards and promotions to thrive.
Overall, the retail industry showcases resilience amid economic pressure, with notable opportunities in adapting to shifting consumer needs in both mainstream and premium market segments.
The 2024 State of the Retail Nation report from NIQ South Africa illustrates a landscape where moderate retail growth persists amidst economic pressures. Significant consumer spending trends reveal a shift toward value, particularly in private label brands, while challenges in the T&D sector highlight the impact of market saturation. Future retail success hinges on adaptability and a keen understanding of evolving consumer preferences, particularly in balancing discounts with premium offerings.
Original Source: www.zawya.com
