Hello The 22seven Insights spending dashboards offer investors and retailers a detailed, real-time view of the aggregated spending decisions of more than 50,000 actual consumers across South Africa. Insights tracks spending across seven major categories such as Food, Apparel, and Home. Every major category is further segmented into sub-categories, and a specific dashboard is available for each one. This month, we’ve updated and expanded the dashboards and we’ll continue to do so over the next few months. 

The Insights dashboards provide a market overview that includes changes in market share for each retailer, as well as an estimate of growth in user spending. Users are segmented into six income brackets that allow for detailed tracking. In addition, the dashboards include five years of historic information and other metrics, such as average transaction value and median monthly spend per user. 

Shop Talk is our monthly newsletter that provides commentary on major themes emerging from the dashboard categories. This month, we turn our attention to the Home category…

Spending trends from the Home category:General Merchandise, Furniture & Homeware, DIY & Garden

By

Simon Anderssen

Growth in 22seven user spending slowed in March across all tracked categories. The causes of this are well-reported: higher interest rates, load-shedding, higher inflation… Evidently, these factors are taking their toll.Spending by 22seven users on General Merchandise, the largest of the Home sub-categories, has been in decline for 18 months. Media spending (mostly pay TV and streaming services) has weakened rapidly since the action-packed end of 2022. Clothing spending slowed abruptly in March.Spending in the Groceries and Pharmacy categories has been more resilient, but growth here is also slowing.The outlier category is Lotto & Sports Betting (albeit a much smaller category). Spending here continues to enjoy considerable growth, far ahead of other categories. 

Digging a level deeper, the following heatmap gives more detail about 22seven user spending in different income brackets in the major categories. In general, weakness within each income bracket has emerged from the discretionary categories: General Merchandise, Clothing, and Media. But those are not the only categories affected by consumer weakness; the graphic also reveals slowing growth trends in March in categories where spend was previously increasing. 

This month we’re focusing on spending in the Home category, which we’ve broadly segmented into three sub-categories: DIY & Garden, Furniture & Homeware, and General Merchandise (GM). GM is the largest of these and includes Takealot, Makro and Game, as well as electronics-biased retailers like JD Tech (Incredible Connection and HiFi Corp). Naturally, there’s overlap between the sub-categories and there’s an element of judgement required to categorise the retailers.The three largest retailers in each sub-category are highlighted below. The structure of each market is similar, with one main retailer making up 32-42% of total spending; two retailers of roughly equal share as runners up, and a large number of other retailers (25-35) making up the remaining 35-45%. 

Takealot is already a large retailer among 22seven users. Compared to a year ago, its share of spending has increased by more than any other retailer in the group. This follows a trend of falling share in 2022 as in-person shopping normalised after the Covid lockdowns. 

At the opposite end of the chart, the Other category includes ~16 smaller retailers that have struggled over the same period. Among the major retailers, the data suggests that Pepkor’s JD Tech (principally Incredible Connection and HiFi Corp) has underperformed, and Game continues to struggle as a wholly-owned division of Walmart. 

Insights identified 33 major retailers that comprise the majority of user spending in Furniture & Homeware. Of these, MRP Home is the largest. Even though sales growth has declined, our data indicates that it gained market share in 1Q23, compared to a year ago.The group of retailers in this category includes several sizeable unlisted retailers, such as West Pack Lifestyle and Crazy Plastics. Both retailers sell a similar range of plastic storage and household supplies, and both gained a meaningful share of spending over the past year. We observe significant growth in this sub-segment and expect it to attract some corporate action from listed retailers searching for growth. We will present more evidence of this in a future research note.Again, Pepkor features on the red side of the chart: its JD Home division lost the most spending share among 22seven users over the past year. 

The DIY & Garden sub-category in the Home vertical has been structured to allow for a cleaner comparison of the major retailers in this segment. Builders Warehouse is the giant, with nearly 45% of spending share in a group that contains 27 retailers in total, including specialist garden and paint merchants. Many of the larger retailers in this group have regional store footprints: some examples include Brights in the Western Cape, and Leroy Merlin and Chamberlain in Gauteng.During 1Q23, Builders Warehouse’s spending share declined, shipping gains to the likes of Brights and Leroy Merlin. Agrimark and CTM also increased their share.

That’s it for this month. There are many more insights available from our spending dashboards. Please set up a time to discuss these in more detail to ensure you get the most from this unique data set. 

If you want to know more about data-driven consumer trends in South Africa, sign up for Nugget, our bi-weekly newsletter. You can also follow Insights on LinkedIn and Twitter.

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