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Aki Kalliatakis - Managing Partner, Leadership Launchpad
Aki Kalliatakis - Managing Partner, Leadership Launchpad

Retailers start to wonder: Is there a Santa Claus?


Dec 13th, 13:05

Compiled by Aki Kalliatakis, founder of The Leadership LaunchPad, a consultancy that advises businesses on how to raise customer service standards

If you think kids get apprehensive about what they’ll get for Christmas you should see the average retailer.

According to one UK estimate, Christmas sales can account for 30%-60% of annual retail turnover. It’s understandable therefore that retailers wonder what Santa has in store. In fact, if this turns out to be an austerity Christmas, some retailers will be wondering if there’s any Santa at all.

Kids look to the North Pole for signs of Father Christmas. South African retailers do something similar. They check international indicators.

They will have seen UK reports that poor October sales have been followed by an uptick, though commentators are unsure whether it’s a blip or the start of a strong run-in to Christmas.

In the US, seasonal retail activity after a catastrophic 2008 appeared to be on the up and up. In 2012, the average US family Christmas budget rose to nearly $750.

This could change, however. Americans engage in shopping madness nearly a month from Christmas over what’s called the Black Friday Weekend. Stores run big sales. Consumer response is a good guide to shopping appetite ahead of Christmas.

This year, total weekend purchases fell 2.9% to $57.4 billion. Shopper numbers rose, but average spending fell 3.9% to $407.02 cents, suggesting retailers face a challenge if they hope to optimise the Christmas opportunity.

Big retailers like Walmart and Target cut profit forecasts.

What about the situation in South Africa?

By common consent, consumers are under pressure and carry too much debt from last year and probably the year before that.

In response, most retailers are emphasising value (i.e. cheaper prices) and are creating promotions to attract struggling customers.

However, the retail barometer (a consumer confidence index) and other indices show that perceptions are negative rather than positive.

Our GDP grew by a paltry 0.7% in the last quarter, another indication that consumers are hanging on to their money. In November, one Press report said year-on-year retail sales had remained sluggish and were up just 0.2%.

Of course, not everyone is feeling the pinch. The poor get poorer, but the rich are getting richer.

GINI Coefficient rankings for Africa put South Africa and Nigeria at number one and two respectively. The higher the GINI figure the greater the disparity between rich and poor. Our high ranking indicates our rich are very, very rich while those below the top struggle along.

What does this mean to Christmas retailers?

Well, if you’re selling gift packs of hankies and socks to low-income shoppers you might have trouble shifting stock. But if you’re pushing gold bracelets and Ferraris there might be healthy demand. So there is a Santa Claus after all. It just depends how close you are to the top end of the market. 

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