Payday good news for retailers this Black Friday, but December may be a different story

It is expected that this year's Black Friday – on Friday November 29 - will do better than last year, because it falls after payday. This is according to the SA Council of Shopping Centres and based on research by Dirk Prinsloo of Urban Studies.

Black Friday usually falls on the fourth Friday of November (the day after Thanksgiving in the US) and in 2018 fell on 23 November. 

Projections for sales figures for November 2019 indicate an increase from the R100bn in sales in 2018 to R108bn this year. At the same time the total sales for December is expected to remain constant at R119bn when compared to last year.  

The study found that SA consumers have by now become well aware of Black Friday. It is, therefore, likely that some consumers have even been saving up for Black Friday sales throughout the year, while others will do research online to spot the best bargains.

The latest BankservAfrica Take-home Pay Index (BTPI), released on Wednesday, indicates that, in recent months, the aggregate earnings from salaries and pensions have not reflected in retail sales as before.

"This begs the question of consumers building up their savings for events like Black Friday and Cyber Monday," states the BTPI report.   

The index reflects that in October, SA's formal sector take-home pay increased the most in two years (7.2% y/y and 3% in real terms). This is partly on the back of consumer price inflation (CPI) dropping to its lowest levels in eight years.

The October increase in take-home pay will be a boost for retail sales in November, according to the BTPI report.

"If the real take-home pay increases at the end of November are anywhere near October's levels, Black Friday sales will spike significantly," it predicts.

Some shopping centres expect an increase of 3% and 5% on the 2018 Black Friday figures. Many of the large super regional centres will likely be visited by between 120 000 and 130 000 people on Black Friday.

Online shopping will likely also play an increasing role with a very wide variety of bargain options., for example, generated more than R11.5m worth of transactions in the first hour of Black Friday 2018 and it expects its revenue to increase by 80% for Black Friday 2019.

December pressure

Most shopping centres were very cautious when asked to predict December retail sales. This is because Christmas specials have now essentially "moved" to Black Friday, according to the study.

There has also been a clear difference established between Black Friday bargain hunting and "real" (early) Christmas shopping. The latter has less of an emphasis on large electronic equipment and a greater focus on gifts and clothing.

This is the main reason why many shopping centre owners are grouping their November and December sales together.

The study points out that, during the last four years, there were a lot of speculation regarding the real impact of Black Friday shopping on December trade.

The impact based on constant prices showed a strong increase for both November and December 2017, a good increase in November 2018, and a decrease in constant sales prices for December 2018.  

According to the 2015 actual November sales figures, there was an increase from R79bn to R100bn in current prices compared to 2018, while December figures increased from R102bn in 2015 to R119bn in 2018.

"In a country where the consumers will always be under pressure, there will always be bargain hunting among rich and poor," states the report.

FNB debit and credit card holders made over R2.5bn worth of purchases during last year’s Black Friday.

FNB Retail chief executive Raj Makanjee expects the value of Black Friday transactions to rise by 16% this year.

"When comparing typical Friday spend to Black Friday, we usually see a 100% increase in spend by customers," he said.

Long festive season 

"We encourage consumers to be mindful that Black Friday is effectively the start of a very long festive season, therefore it’s important to plan for it properly and budget for purchases."

According to Christoph Nieuwoudt, CEO of FNB Consumer, increasingly, consumers are choosing convenient ways to shop on Black Friday.

Last year, online and in-app transactions on Black Friday grew by 26% while card present transactions saw a 14% increase.

A Black Friday report by PWC indicates that South African shoppers are planning to make 43.4% of their Black Friday or Cyber Monday purchases online and 5.7% plan on utilising virtual assistants like Apple's Siri and Google's Assistant. spokesperson Matthew Leighton says the rise in e-commerce indicates that South African consumers are more trusting now of exchanging their details and making purchases online.

report on Black Friday

(Source: Urban Studies)

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