Sales through Internet-based companies may outdo those of traditional retailers this festive season.
The retail sector has been hard hit during the economic slump. September's retail sales, the latest available figures, showed a year-on-year contraction of 5%. However, there is an upward trend, as August was down 6.5% compared to last year.
Chris Gilmour, an analyst with Absa Investments, says festive season sales in traditional bricks-and-mortar outlets are expected to be flat, or down, on last year when stripping out the effect of inflation on price gains.
“It's going to be a really dreadful Christmas,” he says. However, Gilmour points out that there “are certain niche areas where people who want things will get them online and they are relatively price-insensitive”.
Justin Drennan, CEO of WantItAll, a local niche online retailer, says there has been “huge growth in online sales” with volume up 150% year-on-year. He says November is usually the company's peak festive selling time, because of the long lead times it has to get the products from the US into SA.
This year, it was expecting Christmas sales to be flat. “We are pleasantly surprised with sales volumes and value.
However, he says this could be because consumers received bonuses, and spent them on items they could not otherwise afford.
The most popular items so far are digital photograph key frames, and the entire range of Nintendo products. In addition, says Drennan, many people will receive a Kindle in their stockings this year.
Price check
Incredible Connection CEO Dave Miller says, while online sales are slightly down compared with last year, this could be attributed to the development of its new site, which resulted in some downtime.
The Web is used extensively by customers to compare and research products, which its new site can offer, he adds.
“We find that, because of our national footprint with stores, our customers do their research, but then prefer to pop into their closest branch and purchase the product,” says Miller.
But the online store still has time to add value, as its peak times are from mid-December right up to Christmas Eve, he points out.
Incredible Connection has seen demand increase for netbooks, notebooks and projectors, with these being its most requested items. So far, spending trends seem to be much the same as last year.
Slowdown
However, CNA has seen a decline in online sales. Terry Dale, marketing manager, says sales are marginally down 18% for the year so far.
She says the online retail environment has not been hit as hard as the bricks-and-mortar retail space. This, Dale says, has surprised the company and it attributes the resilience of online shopping to the convenience and ease of shopping online.
In addition, she explains, margins online are lower as there are less costs than there would be with a full store. As a result, online sales are expected to recover much quicker than the physical retail space.
Console games remain a popular online purchase item, particularly new release titles for the PlayStation 3, Wii and Xbox gaming platforms, followed closely by PC hardware and peripherals, Dale adds.
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