#CoronavirusSA: Level 4 brings small relief to retail – 30 April 2020

A lot has happened in this short week, sandwiched between two public holidays, as Government and business prepare to move from a hard lockdown to Level 4 nationwide with a cautious opening of the economy to more essential industries; as well as the allowance of more goods to be sold ahead of winter. Retailing Africa launched its COVID-19 news tracker for the retailing eco-system in South Africa and Africa mid-March; and will be continuing to update our readers with relevant news for our brands and retailers each week of this pandemic.

THURSDAY, 30 April

Level 4 confusion continues

In an abrupt U-turn, Government last night said the ban on the sales of cigarettes and tobacco products would continue into Level 4 lockdown, despite the President announcing earlier this week that the sales would be allowed. Social media platforms blew up with anger from smokers and overnight petitions have already garnered thousands of signatures. Watch this space, this debate is not yet over. Other clarifications of Level 4, which South Africa moves to on Friday, 1 May 2020, were much the same as has been touted in discussion documents over the past week:

• Retailers, wholesalers and spaza shops can continue sell all food products, except hot food, and an expanded range of personal care products. Social distancing and sanitation need to be strict as retailers have been identified as a vector of transmission.
• Hardware shops are allowed to reopen.
• Winter products can now be sold from 1 May 2020, including blankets, winter clothes for all ages, heaters.
• Stationery products for school and student needs, including art supplies and educational books, as home schooling continues until clarity on schools reopening later in May is provided.
• Fabric/textiles are allowed to be manufactured and sold to make masks, which are now mandatory for all South Africans when leaving home, and other personal protective equipment,.
• Home office equipment including computers, mobile phones and related computer products to allow those who can work from home to continue doing so to lesson risk of transmission as the economy is allowed to open gradually under future levels.
• The delivery of hot food is allowed from any restaurant and takeaway establishment, but only if the food service provider can deliver it, and under a strict curfew of 9am to 7pm. No physical takeaways are permitted. Government hopes this will stimulate township delivery opportunities for entrepreneurs.
• While hairdressers and beauty salons are not permitted to open because of social distancing concerns, Government has agreed to expand the list of personal toiletries and beauty products.
• SA ports are all open for exports and imports; and the wine industry will be allowed to resume exports under Level 4.
• All postal and courier services will be allowed.
• Minister of Trade and Industry Ebrahim Patel did say Government is considering opening ecommerce up to more products during Level 4 lockdown. Currently under Level 4 lockdown, retailers, including ecommerce sites, are allowed to sell a slightly expanded range of goods to include home office and winter products.

 WEDNESDAY, 29 April

37% of South Africans shopping more online

With the current lockdown and temporary ban of non-essential products and services, consumers have switched to digital shopping alternatives, with 37% of South Africans saying they are shopping more online, according to a recent Nielsen syndicated study on the impact of COVID-19 on consumer behaviour in South Africa.

Available online shopping platforms, especially for groceries, medicines, and other necessary items, have seen a surge in usage over the last few weeks as consumers prefer not to venture into stores and have increasingly opted for these reduced touchpoint alternatives. This development points to an interesting shift in shopping behaviour, said Gareth Paterson, Nielsen SA retailer lead. He said, where previously fashion, travel and entertainment categories have been the frontrunners for consumers to enter the online retail sphere, with grocery categories, particularly packaged and fresh goods, being slower to gain traction; the lockdown has now accelerated adoption of online shopping for some of these categories.

South Africa’s online grocery shopping penetration and usage has also been quite niche and of the 58% of South Africans with internet access, only 1-2% had regularly purchased food and groceries online and only 8 -10% have purchased in the past year. However, one-third of consumers had expressed a willingness to shop online. This, coupled with the current lockdown scenario, means there is likely to be prolonged behavioural changes in in-store and online shopping, with services like click and collect, automated online subscriptions, and the personal shopping all having the potential for growth, Nielsen reports.

Road Freight Association appeals for more access

The Road Freight Association (RFA) is concerned about aspects of the controlled relaxing of the lockdown, with specific regard to the opening of road freight operations and logistics after 1 May 2020. Says RFA CEO, Gavin Kelly: “We urge that Government opens the road freight transport and logistics industry immediately and that transporters be allowed to operate. Under the current lockdown, we have close to five weeks of practical demonstration as to how the industry has operated in a controlled environment, with all the health protocols required. The association has developed a Road Freight Industry Protocol for COVID-19 which is currently use by transporters moving essential goods. This has proven to be highly effective, according to the RFA.

The following aspects are of grave concern and need to be clearly understood by the authorities, Kelly reiterated:

1. Various levels of lockdown can be instituted by various authorities: The reality that a national / provincial / Metro / local level will be different to others is ludicrous and will create untold confusion and frustration. We have already experienced this in the past four weeks, where a single level was implemented and various authorities both interpreted this differently and came up with their own requirements.
2. The “threat” that there can be escalations to higher levels of lockdown: Seemingly at the whim of the various authorities that will now be able to implement their own levels of lockdown. We need clarity on how is this possible – and what process will be in place to dispute this – apart from the legal route.
3. The integrated and symbiotic relationship within the transport and logistics industry and all its sub-sectors needs to be fully understood:Transport needs to operate fully – if this does not happen, the economy will fall into an abyss from which we will not easily recover. We already have reports of companies closing.
4. International and regional trade links:We stand the chance of losing out on international trade links (air and sea freighters) due to the closure of freight logistics and, when that happens, we will lose our “gateway” status to Africa, as the other countries on the western and eastern sides of Africa will take this up.

The RFA proposes that, from 1 May 2020, freight operations and logistics companies become fully operational, while strictly adhering to the COVID-19 best practice safety requirements, including that all vehicles are sanitised regularly.

TUESDAY, 28 April

Property industry extends relief to retail tenants

The Property Industry Group (PI Group) has increased and extended its assistance and relief guideline for retail tenants. The PI Group launched an initial guideline for assistance and relief for retail tenants on 7 April 2020 and, in response to the extended lockdown; and it has now announced new guidelines to offer greater relief to all affected retailers, especially the hardest-hit SMME retailers. The PI Group has increased the extent of assistance, introduced more retailer categories, provided additional options for some retailers and extended the benefits from two months to three months – April, May and June 2020. The PI Group is a collective of the major representative bodies for real estate in SA – the SA REIT Association (SA REIT), SA Property Owners Association (SAPOA) and SA Council of Shopping Centres (SACSC) – and is coordinating its response to the COVID-19 pandemic and specifically the economic effects of the national lockdown. It speaks for the commercial real estate sector in SA, which includes the country’s large property owners.

The retail tenant assistance and relief guidelines exclude office, logistics, warehousing, industrial, healthcare, hospitality and other tenants. These tenants should discuss their specific situations directly with their landlords, who will consider them on a case-by-case basis without reference to the retail tenant assistance and relief guidelines. President Cyril Ramaphosa in his statement of 9 April 2020 said, “I would like to appeal to all large businesses not to resort to force majeure and stop paying their suppliers and rental commitments, as such practice has a domino effect on all other businesses dependent on that chain”. For the property sector, this value chain includes more than 300 000 jobs directly and indirectly through its service providers such as security, cleaning, hygiene and technical services, and building and construction. The property sector is by far SA’s largest contributor to municipal rates and taxes. It is intertwined with the country’s banking and financial sectors and significantly contributes to the pensions and savings of South Africans. A massive 72% of SA’s annual retail sales, totalling R789 billion, take place at shopping centres. Shopping centres are the nexus of SA’s consumer-driven economy and will be pivotal in SA’s post-lockdown recovery.

To sustain retail tenants during the lockdown, the property industry’s assistance guidelines offer relief for all affected retailers, regardless of size. SMME retailers, however, are the focus of the initiative. The PI Group proposes that small and micro retailers are given rental discounts of up to 100% for April, with further substantial rental discounts and interest-free rental deferrals for May and June respectively. Adding to its far-reaching relief impacts, the PI Group is committed to continuing paying its suppliers in full, including cleaning and security providers, and taking on the increased cost of enhanced hygiene to protect against the spread of COVID-19. This is helping to preserve thousands of jobs nationwide. The PI Group is also paying its rates and taxes, which are vital in supporting the sustainability of municipalities countrywide and by extension supporting the grass level communities and households among which both property and retail sectors conduct business.

“SA’s property sector has voluntarily committed to the relief guidelines even though it hasn’t received any sources of relief, and we’re shouldering our share of the pain. We are paying our full obligations while giving retail tenants substantial discounts and we have gone as far as we can in assisting retail tenants with our updated proposal. Our entire value chain is only as strong as the weakest link. If all the pressure continues to be placed on a single link, it will break and result in systemic collapse that will be felt in every household in SA,” says Estienne de Klerk, spokesperson for the Property Industry Group and Chairman of the SA REIT Association. “We encourage retailers to pursue all avenues of support available to them,” he adds. The property industry guidelines allocate less support to retailers that have insurance cover or receive relief from other sources in order to focus benefits on retail tenants that don’t qualify for other assistance. Retailers should apply to their landlords directly for assistance. Each participating landlord can offer additional relief and support on a case-by-case basis at their discretion. However, the guideline for retail SMMEs is the minimum that qualifying retailers can expect from participating landlords.

The industry’s assistance and relief guidelines still stipulate that all tenants with accounts in good standing at 29 February 2020 can be assured that there will not be any evictions during the lockdown period applicable to them, and they will qualify for some form of assistance from participating landlords. The initiative targets preserving jobs – for retailers, their suppliers and service providers – and to qualify for the relief benefits, retail tenants will need to undertake not to retrench staff during the relief period.

FOR MORE:

#CoronavirusSA tracker: Clarity this week for retailers – 27 April 2020.

#CoronavirusSA tracker: Further clarification on essential goods – 20 April 2020.

#CoronavirusSA tracker: Business pushes back – 13 April 2020.

#CoronavirusSA tracker: #Standingtogether – 7 April 2020.

#CoronavirusSA tracker: Shoprite & Pick n Pay win week: Spar’s brand fail – 27 March 2020.

#CoronavirusSA tracker: Fear and loathing in SA – 20 March 2020.

*Curated and edited by Retailing Africa Publisher & Editor, Louise Burgers. Keep the industry updated and send your announcements and news to: news@retailingafrica.com.

Louise Burgers (previously Marsland) is the Publisher and Editor and Co-Founder of RetailingAfrica.com. She has spent over 20 years writing about the FMCG retailing, marketing, media and advertising industry in South Africa and on the African continent. She has specialised in local and Africa consumer trends and is a passionate Afro-optimist who believes it is Africa’s time to rise again and that the Africa Continental Free Trade Agreement (AfCFTA) will be a global gamechanger in the next decade.

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