The NIQ South Africa report indicates a 3.4% rise in FMCG sales for 2024, driven mainly by price increases amid economic pressures. The T&D sector saw minimal growth due to declining telecom sales. Private label brands performed strongly, while festive spending highlighted a consumer shift towards value-oriented purchases.
NIQ South Africa has published its latest State of the Retail Nation report for the last quarter and the full calendar year of 2024, revealing a modest increase in retail sales despite a robust festive season. Consumers in South Africa expended nearly R637 billion on fast-moving consumer goods (FMCG), reflecting a year-over-year growth of 3.4%, primarily attributed to price hikes rather than greater consumption.
In the Technology & Durables (T&D) sector, growth remained stagnant, with sales value rising only 1.8% to R90 billion. This lackluster performance was largely due to a 2% decline in the telecommunications category, which comprises over half of the T&D market’s total value. Conversely, washing machines emerged as a significant success, achieving a 16% growth in both sales value and units throughout the year.
Zak Haeri, Managing Director at NIQ in South Africa, emphasized that “Despite much-improved consumer sentiment off the back of lower levels of load shedding, social grant increases, and slower price increases, retail recorded only moderate gains in sales during 2024.” He noted that escalating living costs and high unemployment continue to pose challenges, leading consumers to prioritize value in their purchases.
During the festive season, South Africans allocated R359 billion to food and liquor and R278 billion to other products such as beverages, personal care items, and pet supplies. Private label brands surged, growing by 7.1% to reach R98.7 billion in sales, fueled by their increasing availability and the consumers’ emphasis on cost efficiency.
The fourth quarter reported a growth of 4.8%, translating to R177 billion in sales value. Notably, liquor and personal care segments exhibited substantial growth, with December sales hitting R78 billion, reflecting a 9% increase from the previous year.
Haeri noted, “Consumers are still focusing on essential spending and taking advantage of loyalty programmes, private label brands and promotions to stretch their rand further.” This trend demonstrates shifting consumer behavior, with many selecting larger packages for bulk savings or opting for smaller packages to manage immediate expenses.
Despite increased spending during Black Friday, the T&D sector did not recover from its disappointing performance. Although segments like IT and major domestic appliances experienced positive growth, this could not offset the decline in telecommunications. The telecom market alone had negative growth (down 2%) amidst market saturation and gradual smartphone upgrades.
Sales in consumer electronics remained flat, while lower prices and intensified competition fostered a favorable environment for online sales, which expanded by 9% over the year. “The introduction of the two-pot retirement saving system may have contributed to higher sales during the fourth quarter,” stated Thomas Woods, Market Intelligence Lead for NIQ in South Africa.
Looking ahead, Haeri remarked, “While consumer sentiment has improved over the past year, potential headwinds remain,” including possible VAT increases and global trade volatility. He predicts that adaptive mainstream consumers will continue to shape retail dynamics, with retailers who effectively balance value offerings and premium segment opportunities best positioned for future success.
In conclusion, the NIQ South Africa report highlights the ongoing financial strain on consumers, evidenced by a shift towards value-driven purchasing behaviors. The FMCG sector showed moderate growth, while the T&D market faced challenges, particularly in telecommunications. The festive season displayed promising retail activity, driven largely by food and liquor expenditures. Retailers must strategically cater to changing consumer needs, leveraging both economic recovery indications and continued price competitiveness to thrive in the evolving landscape.
Original Source: www.zawya.com
