Consumers spent R214bn on fast-moving consumer goods (FMCG) and technology and durable products in the third quarter of 2024, marking 4.1% year-on-year growth, according to the latest NIQ retail spend barometer.
This increase was driven by steady growth in FMCG sales and a recovery in the technology and durable sector after several stagnant quarters.
FMCG accounted for R183bn of the total spend, growing by 4.5% year-on-year, but slower than the 6.5% growth recorded in the same period last year. Frozen food and fresh food were the key drivers, with sales increasing by 7.4% and 9.1%, respectively.
Nikki Quinn, retail lead at NIQ SA, attributed this growth to reduced load-shedding and shifting consumer behaviour.
“With the pause in load-shedding, consumers continue to gradually increase their spending on perishable goods,” she said. “This trend is set to continue as it appears unlikely that we will see the return of high levels of load-shedding during the summer months.”
The growth in FMCG coincided with lower inflation, which fell to 3.8% in September — the lowest level since March 2021. On Wednesday, Stats SA announced a further decline to 2.8% in October, driven largely by falling fuel prices, though costs remain high.
The technology and durable market, which contributed R31bn to total retail spending, recorded a 2.1% year-on-year growth after a flat performance in previous quarters, according to the NIQ report.
Home appliances — including washing machines, refrigerators, and air fryers — saw a 9.9% uptick in sales, driven by aggressive pricing strategies and the growing influence of online shopping.
Online shopping has increased demand for premium products. According to the McKinsey state of grocery retail 2024 SA report, online grocery sales reached R23bn in 2023, driven by a growing appetite for convenience and healthier choices.
While the tech segment saw a slight decline of 0.3%, this was a marked an improvement from the 4.4% contraction in the third quarter of 2023. The report said growth in routers and soundbars offset declines in smartphones and wearables, which continued to face supply chain challenges.
“Consumers are becoming more deliberate in their spending, particularly in the technology and durable segment. We are seeing a shift towards replacing essential items and seeking value rather than chasing the latest models,” Quinn said.
The retail sector’s performance is boosted by improving economic conditions, including declining inflation and increased consumer confidence. The retail confidence index reached 54 points in the fourth quarter, its highest level since 2007.
This optimism has been supported by falling fuel prices, a second 25-basis-point reduction in the repo rate to 7.75%, and the introduction of the two-pot retirement system, which unlocked more than R35bn in additional spending capacity.
Retail trade sales also surged 0.9% year-on-year in September, with general dealers driving growth despite declines in textiles and clothing.
However, while the retail industry basks in its growth, risks remain. On Thursday, the SA Reserve Bank warned of potential inflationary pressures stemming from higher electricity prices, global economic volatility, and a weaker rand.
Reserve Bank governor Lesetja Kganyago said structural reforms were needed to sustain long-term economic stability.
“The environment is uncertain, and it calls for caution,” he said. “The disinflation process is there but it is clearly a very bumpy road.”
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