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26 May 2023 – The retail industry contributed more than R1tn in sales to South Africa’s economy in 2021, with the FMCG sector’s contribution estimated at over 70% of those sales.
The sector returned good sales growth and its defensive nature is borne out by fact that sales grew at the height of the pandemic, contrasting with a decline in sales of non-FMCG products. The FMCG sector faces challenges including a hostile economic environment, electricity constraints, logistics barriers and illicit trade.
Prices
The pandemic and the invasion by Russia of the Ukraine, huge escalations in input costs and disruptive climate changes led to general inflationary pressures globally with food inflation being the main driving force. South African inflation is above the Reserve Bank’s upper target band of 6%.
Food and beverages prices have been the main reason for inflation. Food price increases have been mitigated somewhat by retailers absorbing some input costs and the diversity of agricultural products produced in the country.
Online Growth
Online retail revenue has doubled in the past two years, largely because of lockdown, and this trend is set to continue. Research indicates that more buying decisions are being made online, shopping app downloads are rising and consumers are trying new brands. Speed, convenience, price and stock availability are at the forefront of purchase decisions.
Online sales still account for a very small percentage of retail sales. Consumers still prefer to buy perishable items in stores, and there are concerns about parcel theft and online fraud, high mobile data costs and challenges with last-mile delivery. For more information about this report visit https://www.researchandmarkets.com/r/n0yeet Source: ResearchAndMarkets.com