Credit card data from FNB shows, through our spending habits, how the Covid-19 pandemic changed the lives of consumers in South Africa over the past year.
The lender said it made use of aggregated FNB client credit card spend by various expenditure categories in individual shopping centres/malls, to enhance its insights into the retail property market.
The data sample is quite extensive, with approximately 2,400 retail centres included. FNB highlighted some key spending themes emanating from the data through 2020:
Smaller economic regions fared better
In the early stages of “hard” lockdown, around April 2020, it had already become apparent to that South Africa’s major city regions’ economies, and thus their retail centres too, would likely be more severely impacted by the lockdowns.
With the Agriculture Sector being largely declared an essential sector, more rural agriculture-dominated economies were arguably less shut down, the bank said.
“This meant that employment and household incomes in those regions may have been less impacted, which in turn would likely lead to better consumer spend growth, or less decline at least, in more rural regions’ retail centres than in the major metro regions.”
FNB card spend in retail centres per province shows the “smaller 5” provincial regions all showing some mild positive growth – North West Province showing the highest 2020 growth of 5.8%, followed by Northern Cape (5.5%).
At the weakest end of the spectrum we had the Western Cape with a -2.2% decline, and KZN with -1.3%, while the “Big One”, Gauteng, recorded zero change in 2020 compared with 2019, FNB said.
Work (and study) from home significantly impacted retail
The fact that food and groceries are essential spending items, along with health care and pharmaceuticals – and the fact that there were far more limited lockdown regulations that applied to these – made it fairly obvious that their spend/sales would not dip as badly as retail categories that were locked down more severely, said FNB.
“However, it didn’t initially occur to us that home-related spend – hardware, along with furniture and appliances – would surge as it did just following the hard lockdowns, a function of the home becoming a far more important place for many, given that they worked from there and often educated children from there too.”
As at January 2021, FNB card spend data still showed the top performing major category to be “hardware and furnishing” at 124% of the pre-lockdown January 2020 level.
Lockdown, fuel bills and online spending habits
Fuel sales plummeted during lockdown for obvious reasons. FNB said that the travel situation has been slowly normalising, at a time when oil and petrol prices are rising. However, FNB card spend on fuel and tolls for January 2021 was still only 84% of the level at January 2020.
FNB card spend data recorded a growth surge in e-commerce, excluding tourism spend. From a year-on-year growth rate of 35.6% year-on-year as at March 2020, the May surge in e-commerce spend took its growth to 123.5%.
While tapering somewhat thereafter, this growth remained at a very strong 66.6% as at February 2021, FNB said.
A dismal period for restaurants, entertainment and leisure
The plight of the restaurant and entertainment sector, along with tourism and leisure, is well documented.
FNB card spend data saw the “dining out and entertainment” spend category for January 2021 at only 82% of the January 2020 level, while tourism spend was at a mere 50% of the January 2020 level.
Where were people shopping?
FNB card spend data per centre points towards centres more dominated by essential spending items, notably the grocery shopping category, as having fared better sales-wise, as one would have expected.
This implies that the larger super-regional and regional malls, whose weighting of grocery retail shopping in their sales mix was far less than the small sized neighbourhood and convenience centres, would fare worse from a sales point of view. And indeed, this appears to be the case, FNB said.
Its card spend in convenience centres grew positively by 6.7% in 2020 and that of neighbourhood centres by 6.1%, while spending at super regional malls declined by 10.4% and regional malls by 5.9%.
“Whereas large super regionals for example had only 27.1% of their card spend being on food and groceries, and a large 23.4% on the poorly performing clothing and apparel category, the small-sized neighbourhood centre category had a massive 58.2% spent on food and groceries, and a far lesser 4.3% spent on clothing and apparel,” FNB said.
However, the performance differential between “small” and “large” centres was more than just about the differing weightings of retail categories, it said.
The large super regional and regional centres appeared to lose their appeal even for basic essentials.
“Just zooming in on card spend on the food and grocery category, we saw a 2020 decline of 9.2% in the super regional mall category, while neighbourhood centres saw positive growth of 9.7% in this category.
“In fact, neighbourhood centres even saw positive growth in card spend on clothing and apparel to the tune of +14.4%, while super regionals suffered a decline in this their “strong point” to the tune of 6.7%,” FNB said.
Given that much of the ‘experience’ part of the mall has been restricted, i.e. restaurants and entertainment, the reasons to go there are less, and so convenience and neighbourhood centres have seemingly become ‘king’….or have they?
The centre category whose sales growth appears to have outstripped all others is that of hyper centres, FNB’s data shows. These centres are seen as being affordable places to shop in tough financial times, with big selection in their key focus areas.
With a huge weighting of 81.9% food and groceries spend, and a DIY and hardware component added on, this centre category experienced card spend growth of 14.2% in 2020. This included growth of 14.2% in grocery spend, 23.4% in DIY and hardware, 25.8% in clothing and apparel, and 17.4% in home and furniture spend.
“We don’t see GDP getting back to pre-Covid 2019 levels until around 2023, so household disposable income growth is likely to remain under pressure,” FNB said. “In addition, we believe that low consumer confidence is shifting consumers in the direction of greater financial caution, translating into a rise in the savings rate to come.”
The focus of consumers is likely to remain strongly on essential spend, with leisure and entertainment spend relatively speaking on the backburner. “Another year of outperformance in those centres focusing to a greater degree on the big essentials, and on affordability, is thus seen as likely,” it said.