Black Friday 2024 – Boost or Bust for the South African Economy?

How it all started

The term “Black Friday” originated in the 1950s when Philadelphia police used the term to describe the chaos that often occurred in the city the day after Thanksgiving. Newspapers in Philadelphia began using the term in the 1970s to describe the start of holiday shopping. In the 1980s, companies began to use the term to promote sales and product deals

The trend has grown into an international phenomenon and is today, a label for the adrenaline day of shopping spree that is driven with big bargains on offer pre-Christmas period.

This Black Friday boost in consumer spending, will often put retailers “out of the red and in the black” for the rest of the financial year, and certainly can affect their overall turn-over.

History of Black Friday in South Africa

Black Friday was first adopted in South Africa around a decade ago when South Africa’s largest food retailer, the Shoprite –Checkers group officially adopted it in their marketing strategy, although the online retailer Takealot had introduced the concept two years earlier in 2012.

Initially Black Friday saw massive surges in spend with almost every retailer showing big gains in spend over the period.

Every year, millions of South Africans are seduced by the deluge of delicious discounts and the promise of eternal smugness at not only getting our Christmas shopping done early but saving heaps of money in the process.

However more recently the effect has waned with retailers reporting a much lower response to their bargains in 2023 where overall spend on Black Friday was estimated to be between 2-3% lower than in 2022.

Projections and Statistics

Recent projections provided in a study, indicate that there is to be an expected 6,5% increase in Black Friday spend, compared to 2023, and this sounds great until you peel back the detail.

The 6,5% growth calculated includes price inflation, and with the current annual consumer inflation rate running at around 4% for 2024, this would leave around a 2,5% growth, which in fact just takes you back to the spend volume seen in 2022.

On-the-day spending for Black Friday last year declined according to ABSA Bank: The rand value of transactions dropped by 4%, in comparison to 2022, and Furthermore, foot traffic on Black Friday 2023 plummeted, with an 80% decrease in in-store visits year-on-year, indicating that many consumers have grown weary of long queues and pushing and shoving of people in-store competing for limited amount offers.

While some of this downturn could possibly be attributed to Black Friday falling before payday last year, the data also suggests a broader change in consumer habits.

Online shopping saw a 20% increase over the first 23 days of November 2023, while in-store spending rose by 8% for the same period, indicating that many shoppers are now seeking out deals throughout the month rather than waiting for a single day or week of discounts.

Consumer Spending Shift

Where there have been sharp increases in essentials like food, fuel, and electricity over the past year, this has resulted in a shift of consumer spend priorities.

Consumers are reallocating their spending to cover rising costs of living rather than spending this on discretionary purchases and on luxuries. There is a definite pull back from buying what is not needed with consumer savvy making an impact on Black Friday

However, it is unlikely that the market will see the same performance as previously experienced due to consumers who are still suffering and recovering from prolonged high interest rates, high inflation, unemployment, and low household income and salary increases.

South African retailers are also facing economic headwinds that complicate their ability to fully capitalise on Black Friday’s potential. This has forced businesses to walk a fine line with pricing and special offers where there are less big discounts on offer than has been seen previously.

What Should Businesses be doing?

Here are a few options for business to consider when approaching Black Friday Offers:

1. Take Note of Your Data and analyze this carefully: How many loyalty cards do people have and how many offers really hit the spot? Analyzing your data and providing unique special offer discounts is clever business as it prevents a one-size-fits-all approach that often misses the mark. Rather have targeted offers that fit and would potentially get your customers to spend more for the right offer.
2. Be prepared to go where no one has gone before: Maybe its time for a re-think of strategy with so much emphasis on a single event, your business could well be doing better if it ventured out of the paddock and into the fields. A January sale, for instance, might achieve better results when people do not have sufficient budgets and where discounts may well entice them to spend more overall at your store. Also perhaps there is a greater chance of getting results on products that other retailers are not doing discounts on and again data and analysis is key here.
3. Ask your Customers: Many retailers today don’t even bother asking their customers what they are looking for and what would make them excited to buy. Understanding the pain points and triggers of your market is essential today. The more you can understand the better your offering, the better your outcome of sales.
4. Go Digital and Deliver: While many retailers do have digital or online stores, smaller businesses are often losing out on gaining a greater share on market by ignoring the digital space. Location is no longer a barrier, with many consumers willing to buy online and enjoy the convenience of a home or office delivery rather than having to get into a vehicle and travel for special offers. Here having a great delivery solution with flexible pricing and low cost deliveries or discounted or free delivery may be a bigger draw card than a small discount on product price.
5. Market Smart: Simply having a discount is not going to bring customers to your store or online shop. You need to get smart with your communications and messaging. E-mails, SMS messages, WhatsApp groups etc are all great tools but your messaging needs to be on key and it needs to be personalised. This is where a great CRM AI tool can be of incredible value to businesses in order to analyse, adjust and communicate messages and to measure responses so that future messaging starts to get better and your understanding of your clients becomes pin point accurate.