In Brief
- August data indicates that spending for most retail sectors is on the decline, highlighting potential shifts in consumer behaviour.
- Despite the growth in online shopping, in-store sales continue to play a significant role in retail performance.
- Data suggests that retailers with strong in-store and online channels may be outperforming those focusing on a single channel.
- We explore how an omnichannel approach could drive the competitive advantage needed to dominate online-only entrants.
August brought notable shifts in consumer spending across retail categories. Our latest data reveals declines in most sectors, with intriguing exceptions that warrant a closer look.
Growth in Spend per Category
Virtually all retail categories (eating out, general merchandise, groceries, media and pharmacy) experienced a drop in sales growth YoY from August 2023 to August 2024. Apparel is the notable exception: Despite being the worst-performing in total growth year-over-year, it was the only category to maintain stable spending over the period.
Media spending saw a significant drop, from the highest growth in 2023 to the second lowest in 2024. The steep drop could indicate a shift in South Africa’s media consumption, potentially reflecting dramatic declines in media subscriptions like DStv, and increased adoption of free social media platforms.
Inflation and economic pressure could also be causing consumers to cut back on discretionary spending in categories like eating out and media. It’s certainly why consumers and retailers alike will be delighted by the Reserve Bank’s September 2024 interest rate cut of 25 basis points and also tracks with the trend of living essentials such as groceries seeing the most growth in spending.
The challenge for retailers will be to adapt to these changes in consumer behaviour while seeking growth. And this could be where the omnichannel approach becomes vital…
The Omnichannel Advantage
Omnichannel retailing refers to providing a seamless shopping experience across both online and offline channels. It endeavours to meet consumers where they are, which in the pandemic and immediate aftermath was definitely online and at home.
However, four years on, and with numerous online-only players entering the scene, there’s reason to believe that the physical store is not dead. It could even be a vital element in making e-commerce truly viable.
Data shows that retailers like Checkers, Bash and increasingly Woolworths, which all have strong online and in-store offerings, outperform competitors.
When comparing grocery in-store versus online growth in market share over the past year, delivery outpaced in-store. But zero in on just the last 3 months and you’ll see that in-store gained almost 3X market share compared to delivery in the short term.
Market Share: Grocery In-Store VS Online
While Delivery has certainly seen the most growth over 12 months, look at In-Store (in green); it saw the most growth over the most recent 3 months – the physical store remains a strong and vital part of retail.
And let’s not forget that in-store still accounts for the lion's share of the overall market in South Africa – 67% versus online’s 11% – meaning that if you’re strong in-store, you likely have the continued income and ability to invest in developing your e-commerce business.
🛍️ Curious which retailers are winning the omnichannel race — and how Checkers, Woolworths, and Bash are holding their ground against global challengers like Temu and Shein?
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