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Tough festive season increases retail competition

| Economic factors

With a tough festive season ahead and many consumers expected to turn to credit in order to make purchases, Marius Muller, CEO of retail property investor Pareto, believes there will be even greater competition among retailers.

The retail sector is likely to remain under pressure, with financially-strapped consumers trading down to more affordable products and services,” he explained.

Due to South Africa's weak economy, holiday sales are likely to be flat and hard-pressed to beat inflation, Marius Muller, CEO of retail property investor Pareto said on Monday.

Value for money is, therefore, expected to be a top priority for shoppers this festive season.

"Like the year so far, the 2015 festive season is set to be tough and highly competitive for retailers. Consumers are really feeling the pinch as there is massive pressure on their disposable income,” said Muller.

“I have great concerns about the state of the economy. Perhaps even more worrying is the lack of firm macro-economic plans to get the economy going.”

Muller believes grocers and fashion retailers can still expect to perform well, relative to other retail categories. On the other hand, the high price points of electronics retailers is at odds with small holiday budgets, and means they will struggle to perform, in his view.

Because consumers are hard pressed for time, Muller believes regional malls will attract the most visitors this festive season.

As for festive entertainment at malls, he said it is undoubtedly a great contributor to creating an enhanced shopping experience, but, in the final analysis, the only issue that really counts is whether retailers are carrying the products consumers are looking for.

On Monday Shoprite and Checkers supermarkets announced that until December 24 they offer to beat any toy price by 10% if a competitor brick-and-mortar store advertises the identical item at a lower price this festive season. Both retailers placed their festive season toy orders months in advance, when the rand was stronger.

The current biggest toy franchises in South Africa are those for Disney’s Frozen and Star Wars movies, according to Neil Schreuder, marketing director for Shoprite-Checkers.

A surge in demand for educational toys such as the LeapFrog LeapPad, Kano Computer Kit and I-Que Smart Robot is expected this festive season as the trend toward tech-driven toys and gadgets for children continues to dominate, according to Declan Hollywood, Chief Marketing Officer at takealot.com.

"We’re also likely to see strong demand for old favourites with a fresh twist, such as the newly-launched Monopoly Cape Town Edition, especially as families head on holiday and look for fun activities to share.”

Rounding out this year’s toys hot list are items such as the Space Rail and Bellz at the lower end of the price range, while advanced toys such as the Wonder Workshop Dash and Dot Combo Pack offer attractive options at the higher end, he added. Santa is also likely to be the first to experience Star Wars fever as toys tied to the hotly anticipated seventh instalment in the saga top kids’ wish lists this festive season.

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