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As we described in this week’s Nugget, November and December are especially important months for retailers. In certain categories, combined, they account for nearly 25% of annual spend, even though they comprise only 17% of days in the year.
It’s common for listed retailers to provide trading updates to the end of December – these announcements are likely to start being published next week. To get ahead of the game, we’ve analysed the debit and credit card transaction data of a large sample of real consumers to estimate the spending growth that these retailers may announce over the coming weeks.
Less cheer than last year
In general, our data shows that consumer spending growth continues to weaken. Spending growth slowed in December in most categories. There were some categories (like Eating Out, Pharmacy and Grocery) that increased ahead of total spending growth, but others (like Apparel, Media and Home) lagged behind. Across all categories, spending on Apparel slowed most in December.
December 2022 saw much higher rates of spending growth, making it harder for consumer-facing companies to maintain their growth momentum, especially since the trading environment hasn’t become any more favourable.
Growth in spending by category (22seven users)
Bringing it together for the listed retailers
In anticipation of January trading updates from the major retailers, one method of consolidating the info gained from spending growth data is to compare spending growth with share price movements.
There are many ways to do this. In the chart below, we contrast the change in share price since early December (45 days; relative to the JSE General Retail index) with the three-month, year-on-year growth in spending. We provide this for each retail brand and its listed parent. For example, you’ll notice that PnP supermarkets (PIK – PnP) is shown separately from Boxer (PIK – Bxr) to highlight differences within companies. We do the same for Shoprite and Pepkor.
In this view, we’d expect points to be clustered along a diagonal trendline through the origin. (We’ve plotted this to make it less imaginary.) While there are other permutations of period and metric that could be plotted, and a multitude of other considerations to take into account, our attention is focused on the companies and brands that lie furthest from the straight line.
Want to see where the major retailers fall on the chart? Contact us to find out more. Clients can also request the underlying spreadsheet to evaluate their own permutations of data in this chart.
Showmax, slowmax
Lastly, if you’re a media company reliant on a sports audience, it may be hard to grow when the past 11 months have included three major world cups!
For instance, annualising the dividend from the FIFA World Cup in late 2022 seems to have meaningfully knocked spending on Showmax in November and December 2023. For spending in this category to return to growth, we may need to wait until the end of 2024 for the benefits gleaned from the rugby and cricket world cups to have fallen out of the base period. Especially considering that spending on DStv weakened during the last six months, notwithstanding the boost from the two world cups, which has dragged overall spending in the category lower.
Spending growth on media and streaming services (22seven users)
