Welcome to our newsletter that provides commentary on themes emerging from our live Market Reports. This month we're digging deeper into spending in the Apparel category. 

In last month’s Shop Talk, we highlighted a sharp decline in spending growth across all retail categories during March. One hypothesis is that this decline might have been due to Easter and its associated public holidays coming earlier in 2024, compared to 2023. 

Encouragingly, there was a meaningful uptick in annual spending growth during April across the board, even as rolling quarterly growth continues its moderate slowdown. 

The only spending category moving in a clearly positive direction is Pharmacy Retail, with growth in other major categories flattening or declining. Spending on streaming services might still be negative, but things are looking better for the Media category as it enjoys a strong improvement in growth.

SPENDING GROWTH BY CATEGORY

In recent months, we’ve published extensive analysis about the impact of international e-commerce sites like Shein and Temu on the local market. The effect that these sites have had on established retailers has been mixed. In the chart below, we show the 3- and 12-month change in market share for the largest apparel retailers in our data.

Over the past year, Shein has had a significant impact on this group of retailers, even though it appears to have lost momentum over the past three months. Against the backdrop of Shein’s outperformance, TFG’s annual performance has also been excellent relative to its peers. 

TFG’s online division, Bash, is responsible for at least some of the group’s gains. Facing stiff competition, Bash has provided a good buffer against international juggernauts like Shein, and more recently Temu.

3- AND 12-MONTH CHANGE IN MARKET SHARE FOR INCOME BRACKET R15-25K PM

The chart above tracks spending growth for users in the R15–25k pm income bracket. The table below expands on this, showing relative performance for the listed apparel retailers across the income spectrum. 

In general, our data shows good momentum for Ackermans and underperformance for PEP. This finding is consistent across all income brackets. MRP Apparel is gaining share at the lower end of the market and losing at the top end. The performance of Truworths appears weaker outside the R15–25k income bracket, whereas TFG reflects the opposite trend. 

3- MONTH CHANGE IN MARKET SHARE BY INCOME BRACKET

With limited growth in consumer income, and surging international competition, the priority for retailers is to keep the customers they already have. Customer retention is hard to measure, but we think it can offer an objective metric.

The chart on the next page shows average three-month retention for the major apparel retailers. We define three-month retention as the proportion of customers who shopped at a particular retailer in the past three months, compared to the preceding three months.

Even among a digitally savvy, relatively-affluent sample of consumers, PEP has the highest retention rate among the top apparel retailers: 54% of customers who shopped between November and January shopped again at PEP between February and April. CottonOn has the lowest retention. 

In general, the data supports our intuition that the more fashion-orientated retailers (like H&M and Shein) have a lower retention rate than retailers that offer everyday clothing (like PnP Clothing and Ackermans), or retailers with a very broad offering (like PEP and TFG). 

Like most retail metrics, retention tends to be seasonal. Therefore, we have also shown annual growth in retention as an indicator of the trend. On this basis, retention is falling at most retailers. Superbalist is experiencing the weakest retention while Shein is the overwhelming standout over the year.  

AVG 3-MONTH CUSTOMER RETENTION VS ANNUAL GROWTH IN RETENTION

When it comes to average transaction value (ATV) at listed retailers, this metric has also slowed or declined in most cases in recent months. This slowdown is shown in the charts below, which plot the average change in ATV for two income brackets: R15–20k pm and R40–60k pm. The charts are similar and show how consistent this trend is across the demographic spectrum. 

Relative to its peers, TFG again follows a more resilient path. We expect positive news from Bash and a relatively strong trading performance when results are announced. 

In general, declining ATV might reflect moderating inflation and/or greater discounting to clear stock.

CHANGES IN ATV AT LISTED APPAREL RETAILERS, BY INCOME BRACKET

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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