Experiencing levels 4 and 5 of lockdown in South Africa was a major challenge for many businesses. While it is difficult to gauge the effects and possible recovery in the private sector due to the lack of transparent information, we can get a sense from the reported numbers of the publicly listed companies.
Going into lockdown, it was no surprise to see a boom in food retail numbers as people stocked up in an almost panicked frenzy. The significant degree of pantry-loading assisted the sales figures of these businesses substantially. Additionally, categories that were allowed to trade had online retailers such as Takealot doing volumes equivalent to Black Friday on a daily basis. In many instances the logistics of these companies was insufficient to keep up, as evidenced by non-food deliveries being delivered by Uber.
Food and some online categories were allowed to trade to varying degrees during the hard lockdown, so the disruptions were less than in the clothing space. Not surprisingly, the clothing space experienced an almost complete standstill of sales as their categories were not allowed to trade. What we have seen in the most recent updates which cover the level 3 period post the hard lockdown is that clothing has generally not recovered. With only Mr Price and Pepkor posting positive sales momentum in the period post level 4, the balance of the market reported decidedly negative numbers. It can be said that these lower price point retailers benefited from the additional grant money in the system.
Across the retailers, in some cases there was a jump in numbers directly after level 4 due to pent-up demand, but these quickly turned negative. Even where the numbers were positive, the companies point out that they were experiencing softness towards the end of the periods which they reported on. What is not completely clear is what is fuelling the weakness in the overall clothing market. It’s easy to say that it's consumer weakness, as many consumers are no doubt in a worse position now than they were a few months ago. It may also be that many are adhering to the stricter lockdown rules out of fear as the number of infections in some areas of the country continues to rise at an alarming rate. Finally, it may be shopper fatigue as it becomes a lot less enjoyable shopping for clothing when you need to stand in a queue outside the store for more than 20 minutes.
Either way we can surmise that the environment for apparel is decidedly weak at the moment, with no clear signs of improving in the short-term. This probably means we can get ready for some significant sales in the coming periods as retailers attempt to move the stock which they have been unable to sell.