South African retailers are gearing up for one of the year’s busiest weekends as Black Friday sales lure shoppers with unmissable discounts. This year’s Black Friday, however, is unlikely to change weak retail trade sales growth, which moderated to a lacklustre 0.7% year-on-year in September, from 2.5% in August, affirming the economy’s muted consumption demand.
The sector, which accounts for about 60% of GDP, will indicate whether South Africa is on track to hobble out of a recession in the second half of the year as September’s mining production declined 1.8% year-on-year and manufacturing remained stagnant at 0.1%.
Despite South Africa’s muted growth, the retail space continues to grow in one area – e-commerce. The recent Online Retail in South Africa 2019 study by World Wide Worx shows that online retail continues to grow at a high rate, having maintained a growth rate well above 20% since the turn of the century, lifted by the exponential adoption of smartphones.
Taking 2017 as a base, South African shoppers have showed an affinity towards Black Friday. Data shows that television unit sales were up 47%, with smartphone unit sales spiking by 63% during the week of Black Friday 2017 in contrast to the same week in 2016.
Despite the technical goods’ popularity, pricing remains the most attractive feature of Black Friday shopping sprees. “South African technical goods e-commerce retailers run promotions throughout the year; what’s more, prices, in general, are lower online than in-store,” says Kali Moahloli, commercial head for market insights at GfK SA. “The result is that there is a constant fight for the attention of a connected consumer, who is constantly looking for bargains and specials. On Black Friday, shoppers are eager to spend, but they are also waiting for deals that are truly worthwhile.”
Contrary to popular belief, the first recorded use of the term ‘Black Friday’ was not in any way related to binge shopping the day after Thanksgiving in the US. Black Friday dates back to a crash of the US gold market on September 24, 1869, when Jay Gould and Jim Fisk infamously bought as much gold as they could hoping to drive up the market price and sell it for astounding profits. As gold soared to $162 an ounce, the first ‘Black Friday’ was born.
Its ‘shopping’ identity emerged in Philadelphia during the 1950s, with police using the term to describe the chaos of the day after Thanksgiving when shoppers swamped the city ahead of the big Army-Navy football game held every Thanksgiving weekend. The holiday presented the ultimate opportunity for brick-and-mortar stores to clear stock, and the concept took hold.
South African consumers have had a tough year. A soaring petrol price, subdued GDP figures and depressed wage growth, coupled with a volatile rand, makes for a forgettable year.
BankservAfrica released September’s take-home pay figures, which continue to show sluggish growth. The only positive from the report was a scanty increase in the figure attributed to backdated government salaries being paid.
With consumers under strain and wage increases on the meagre side, retailers will need to think carefully about how to bag consumers’ disposable income.
“The result could be a spike in Black Friday sales, but at the expense of sales growth in December,” says Moahloli, adding that this has happened in the UK.