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Retailers can expect an uptick in sales from this year’s Black Friday

Thanks to an upward trend in consumer spending.
Consumers and retailers look set to have a good Black Friday season. Image: Supplied

Sales for this year’s annual major pre-festive season sale, Black Friday, are expected to rise compared with last year due to a 12.3% increase in consumer spending recorded between July and October.

This is according to BankservAfrica’s recent point-of-sale (POS) and ATM data which reveals that though it is uncertain whether this year’s spending will return to pre-pandemic levels, the economic ‘bounce’ – achieved despite the hard-hit Covid-19 months as well as the July unrest – may contribute to positive consumer spending trends.

The extension of Black Friday specials to the entire month of November may have driven sales in 2020, but retailers felt the full blow of Covid-19 as seen in the disruptions to global supply chains, less stock in stores, and consumers’ increasing preference for online shopping.

“In November 2020, the spend was R54.8 billion in real terms, compared with the R60.5 billion in November 2019, according to our POS and ATM data,” says Martin Grunewald, chief business officer at BankservAfrica.

Pressures remain

According to Economists.co.za’s chief economist Mike Schüssler, the average consumer transaction value declined to a nominalised value of R422 from R457 in October 2020.

“Still, with the economy’s better performance compared to 2020, we expect November’s card sales and ATM withdrawals to surpass the previous year’s Black Friday, as specials once again run throughout the entire month of November as well as on Black Friday,” says Schüssler.

However, he adds that with petrol prices at all-time highs and salaries falling below the inflation rate, South African consumers remain under pressure.

“Despite the stronger sales predicted, it is unlikely that this year’s Black Friday will reach the 2019 levels,” says Schüssler.

According to BankservAfrica’s insights, the current global supply chain crisis could disrupt the stock of high-value and most sought-after goods, such as mobile phones and cars.

It noted that: “The pent-up demand from consumers holding back on credit purchases may also drive up borrowing for sales.”

Read: Don’t allow Black Friday to push your debt-to-income ratio over the edge

Consumers keen, but with high expectations

A statistics report by Finder.com indicates that roughly 74% of South African adults will shop on Black Friday, depending on how they perceive the value on offer.

Most say it will take a discount of 50% for them to consider making a purchase, while one in five adults say they will need a discount of up to a whopping 90% to pique their interest.

Across the board, retailers will need to slash their prices by more than 60% to motivate the consumers to shop this year, Finder.com adds.

Market analyst Wayne McCurrie says most retailers seem to be over the [effects of the] riots considering that company results from retailers, such as the Shoprite Group, don’t reflect their impact anymore.

Read:

“Even though it was a terrible event, we are over it – it’s behind us now. It hasn’t really affected anyone to any great extent at all, so that’s good news.

“Secondly, consumer expenditure is actually quite strong and the grants that have been paid out certainly have helped people who unfortunately lost their jobs,” he said.

“The consumer is doing well so therefore the retailers should expect a very good year, certainly better than last year. And just on Black Friday, it is changing. It is like Black November or Black Friday weekend [because] people have the specials for an extended time period.

“Consumers will have a good year and so will the retailers.”

Listen to this MoneywebNOW podcast with Simon Brown and Anchor Capital’s Casey Delport discussing consumer spending trends (or read the transcript here):

Palesa Mofokeng is a Moneyweb intern.

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