The term “Black Friday”, in the retail sense, has its roots in the American retailer Macy’s Thanksgiving Day parade in 1924, and the Friday after Thanksgiving is recognized as the unofficial start of a bustling holiday shopping season “Black” refers to stores that go from “in red” to “in black”.
South Africa only adopted the tradition around 2012, but it has taken off among South African consumers. According to a Finder research report, 47% of South African adults will buy this year’s Black Friday sales on November 26, or 18.5 million people.
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What can we expect this year?
The main current issue facing retailers this Black Friday is global supply chain disruptions and whether retailers have made enough stock supplies before the big day. Any shortage of stock will not only reduce the availability of stock for consumers, but will also limit the scope of Black Friday promotions that consumers will find on the shelves.
Last year’s Black Friday was severely affected by strict lockdown conditions, but in 2021 the Covid-19 vaccination program was implemented in South Africa, which will likely make consumers more comfortable going to shopping malls this Black. Friday. For those consumers who still prefer to stay indoors, the pandemic-accelerated shift to the internet will be the key differentiator among retailers in the way they position their Black Friday specials online this year.
Given the current economic environment, the South African consumer has increasingly become a value-seeking shopper, making Black Friday an opportunity for local retailers to deliver this value. However, the current relevance of Black Friday depends on how retailers position their offerings based on their understanding of consumer preferences. South African consumers know very well what a true discount is and if retailers can offer the consumer real value during Black Friday, this will continue to drive the relevance of this trading day.
Accessibility and convenience
Another critical issue that has not only emerged from Covid, but is significant to Gen Z, is the importance of accessibility and convenience. It’s not enough for retailers to have an online deal this Black Friday, but customers value things like checkout time, speed of delivery, ease of returns, or having products available on multiple platforms. With a trading day like Black Friday, it’s all about finding the best deals and buying those products in time before stocks run out. A retailer that can offer that convenience and accessibility through a better quality and differentiated e-commerce strategy becomes more valuable to the customer and will allow Black Friday to remain a key shopping period for South African consumers in the future. .
From a consumer demand perspective, we should see an increase in demand as we approach the holiday season as Covid-19 restrictions have eased and shopping center activity recovers. However, spending may be somewhat constrained by factors such as continued fuel price increases that put additional pressure on consumers targeting this period.
Which retailers will benefit the most this Black Friday?
Given the supply chain concerns mentioned above, general traders and apparel retailers with the highest exposure to imports will be at higher risk of shortages during the holiday season compared to food retailers who primarily source from products locally.
Of the apparel retailers, those exposed to the value segment will continue to benefit from the Covid-19 relief grant, while retailers with the best online offer will continue to benefit from consumers increasingly seeking convenience. Since more employed people are likely to return to the office as the impact of Covid subsides, this will also support increased demand for formal wear. As a consumer segment, the upper-middle-income consumer has significantly increased cash deposits with banks and this could continue to support stronger cash sales relative to apparel retail credit over the medium term as well.
Jami Jepthas, Investment Analyst, Mergence Investment Managers.