Welcome to our newsletter that provides commentary on themes emerging from our live Market Reports. This month we're looking at spending in the Retail category. 

July has historically been a strong month for South African retail, and 2024 is no exception. The combination of winter weather and mid-year clearance sales have spurred consumer spending.

Even the Apparel sector, which faced a significant dip in May, has shown signs of recovery. Indeed, this year, amidst the surging numbers across our monitored categories, we're seeing some interesting developments.

Let’s get into it.

Building on significant gains in June, the Pharmacy and General categories have emerged as the stars of this winter's performance. These categories have experienced an even sharper increase in growth, with our graphs showing steep upward trajectories.

The surge in the General category has been particularly intriguing, potentially linking to the Olympics being streamed in early August. By the end of July, affordable TVs in the R10,000 to R20,000 range were nearly sold out in Cape Town, suggesting a buying spree as South Africans prepared to cheer on athletes from the comfort of their homes.

Growth in Spend per Category

After a slight uptick in growth in June, the Grocery sector showed a robust recovery in July, with spending levels approaching the peaks typically observed during the festive season.

Digging deeper, Reveal uncovered a significant shift in Grocery shopping habits. After months of digital dominance, July’s grocery spending growth saw a resurgence in in-store shopping. Spending figures revealed consumers are flocking back to physical stores, with prepared food delivery now on the decline. Findings mark this as the lowest growth rate for prepared food delivery that we've seen in over a year, hinting at a consumer behaviour shift towards tangible, in-store experiences.

Growth in Spend for Prepared Food Delivery

A return to traditional shopping doesn't spell the end for e-commerce, however. We've been tracking the performance of South African brands vs new players entering the online landscape for some time. We set out to explore customer retention (brand loyalty) in the online general dealer space. Our analysis of three-month retention rates (comparing April-June to January-March) revealed compelling insights.

Takealot has solidified its lead with an impressive 67% retention rate, leveraging its established reputation. Unlike grocery or apparel stores, where frequent purchases are common, general merchandise retailers like Takealot seemingly benefit from their vast product range, drawing their customers back to make different purchases every few months.

Hot on Takealot’s heels, Temu managed to achieve a 50% retention rate despite only launching in March. This suggests that half of the users who tried Temu in its opening month returned to shop again in the following three months. Although a positive start, it remains to be seen whether the VAT-plagued megacorp can retain its customers in the coming months.

Retailer Retention Comparison (3-month)

Shifting our retention focus to different demographics; for the top three retailers, we found that income played a crucial role in shaping loyalty. Users earning over R100,000 a month consistently showed above-average retention rates across all three retailers. Side by side, Takealot’s retention was more significantly influenced by income levels compared to Makro and Temu, highlighting a potential area for targeted strategies.

Age also played a significant role in consumer retention, with repeat purchases highest among users aged 35 and older. Interestingly, while Makro and Temu saw retention rates increase with age, Takealot's peak retention levelled between 35-45 year-olds.

The above findings present an opportunity for Takealot to expand its loyal user base to boost market share, which has seen a slow decline in recent months.

Retailer Retention Comparison: Consumer Age & Income (3-month)

At its core, a customer's monthly retail expenditure hinges on two variables: the frequency of their purchases and the amount spent per purchase. Unlike traditional till sales analyses, Reveal’s data looks at a customer's spending journey throughout the month, tracking their movements and monitoring shifts in behaviour.

In the food delivery sector, Uber Eats consumers are the ones to watch. The company has experienced a notable decline in market share over both three-month and twelve-month periods.

% Point Change in Market Share (3-month vs 12-month)

While Uber Eats did see a slight increase in Average Transaction Value (ATV), this pattern mirrors a broader trend where most retailers are experiencing increased basket values—making the increase more likely due to inflation rather than increased customer engagement.

More tellingly, users are making fewer transactions when compared to previous quarters and the same period last year.

Retailer Market Metrics (3-month vs 12-month)

This means that together with fewer orders per person, Uber Eats is losing users and is facing a challenging chapter. The increased basket values and median spending haven’t been enough to counterbalance the reduced number of transactions. This situation underscores the need for strategic interventions.

A focus on user retention and increasing order frequency are actions to consider. Whether it means enhancing customer loyalty programs, reassessing pricing, or introducing innovative offerings to re-engage users, Uber must pivot to reclaim market share in the food delivery sector.

As we look ahead to August, several key storylines bear watching.

These intertwining narratives and others reshape South Africa's retail landscape. Understanding and adapting to these changes will be crucial for success in the coming months.

 As always, we're here to provide competitive data insights and analysis to help you navigate South Africa's dynamic retail landscape

If you have any questions or are interested in purchasing access to our Market Performance Dashboards don't hesitate to reach out.

Here's to a prosperous Q3!

Our Market Reports offer investors and retailers a detailed, real-time view of the aggregated spending decisions of actual consumers. Reveal tracks spending across seven major categories such as Grocery, Apparel and Home. Every major category is further segmented into sub-categories, and a specific dashboard is available for each. 

The Market Reports provide an 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 Market Reports include five years of historic information and other metrics, such as average transaction value and median monthly spend per user. 

Go to the Market Reports

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