Earlier this year, Fin24.com reported that 2 out of 3 South African consumers participated in Black Friday shopping at some point in 2018, according to Isana Cordier, sector head for consumer goods and services, corporate and investment banking at ABSA.
ABSA card data indicates that, on average, every last Friday of the month consumers spend about 55% of purchases on groceries.
On Black Friday, however, this changes and durable goods make up about 20% of purchases.
“It therefore seems that consumers are holding back spending on those durable items to buy them on Black Friday. South Africans especially like to spend on electronics on Black Friday,” Cordier said.
Black Friday has become the biggest spending day of the year in the SA retail sector with more than R3bn spent on that day last year.
Another interesting trend is that, whereas Black Friday shopping in SA was initially mostly centred around Gauteng and the Western Cape, the “frenzy” has started to spread to other provinces as well.
For instance, the Eastern Cape now makes up about 7.2% of Black Friday spending in SA, KwaZulu-Natal 14.2% and the Free State 4.1%. Gauteng still accounts for 37% of spending in SA on Black Friday.
On Black Friday and Cyber Monday, a total of 5.2 million card transactions were recorded.
More significantly, according to the BETI report, there was 55% growth in online sales for Black Friday and 36.4% for Cyber Monday.
How does Black Friday impact on Christmas sales?
For all retailers the run-up to Christmas is a key sales period. As people buy earlier, it is having a knock-on effect on promotional plans for early December as well as Boxing Day and the traditional January sales.
While Black Friday (and Cyber Monday) provides a significant increase in sales, it has in many ways made retailing more difficult. As David Kneale (ex Clicks CEO) pointed out, “You’ve now got this spike at the end of November, which puts additional cost into your supply chain, into your staffing and stores, and really doesn’t really earn you more money,” said outgoing Clicks CEO David Kneale.
Even so, he said the group had no real had no choice when it came to offering Black Friday deals. “The difficulty is if you don’t participate, you lose out.”
The big winners from Black Friday seem to be hard-pressed South African consumers, who in 2018 have had to put up with an increase in the VAT rate, higher fuel prices and rising interest rates. Though many saw it as an opportunity to buy big-ticket electronic goods at a substantial discount, South Africans generally saw it as a chance to stock up on household staples.
According to Nielsen, consumers took the opportunity in 2017 to stock up their pantries by buying stuff like coffee, detergent and margarine. This could also be seen in nappies being the top-selling product for Takealot in 2018.
Kneale summed up what local consumers were doing this way. “In my view what its impact is, is that people do spend more for Black Friday, but first of all, they save for Black Friday. So you’re pre-black Friday sales are depressed. Then they spend a lot of cash, so your early December sales are also depressed.”