Black Friday slump: Bad timing, blackouts and tough times
Purchasing activity data collected by the financial sector over the much-anticipated Black Friday weekend indicates that a ‘payday miss’, increased load shedding, a tough economic environment, and a longer promotional period over November could all be behind the reduced sales activity last Friday.
Unlike the last couple of years, Black Friday this year was on 24 November and fell just before the most common salary pay date in the country thus impacting a lot of consumers buying power on the day.
Read: Blackout Friday
Last year, Black Friday was on 25 November, and the year before that on the 26th of November. In 2020 the day fell on 27 November, while in 2019 it was on the 29th of November.
The last time we were in the same predicament was in 2018 when Black Friday was on 23 November.
Yusuf Hassan, the head of product management card at BankservAfrcia – who was quoted in a Nedbank statement this week – noted the pay date mishap as a key consideration in the context of this year’s figures.
“Last year’s Black Friday fell after payday, which for most people in the country is the 25th of the month… but Black Friday being on the 24th of the month this year and before most employees would have been paid, may have negatively impacted consumer spending power,” he said.
BankservAfrica reported that this year, local banks registered a 6% decline in Black Friday card transaction volumes.
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Data collected by Nedbank on its own customers’ transactions found that the number of transactions completed by a single cardholder dropped to 64 this year compared to 100 which was reported in 2022.
Similarly, payment processing firm Payfast reported that even though it had a chart-topping R620 000 single purchase transaction from a customer on Black Friday, this year’s average basket size dropped to R1 364, down from R1 689 in 2022.
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FNB also reported a slump on the day but noted a pick-up in activity over the weekend and going into cyber-Monday, after salaries were received. According to the FirstRand subsidiary, there was a 9.7% increase in transactions made by FNB customers over Saturday and Sunday (25 and 26 November).
“While consumers have been financially burdened by inflation and high-interest rates over the past year, we’ve seen strong volumes and value spent over this time despite the slow start on Friday morning,” said Senzo Nsibande, CEO of FNB Card.
“As expected, the most popular spend categories, included travel, groceries, and digital technology. This uptake mirrors the ongoing appetite for travel by South Africans as the travel category showed a 17% increase this year,” he added.
Cost of living
Generally, the consensus seems to be that in light of the tough economic environment, together with high-interest rates and inflation, consumers were more careful than usual to overspend, with most purchases this time around being directed to essential goods.
“Experienced Black Friday enthusiasts now approach the day with a meticulously crafted strategy, pre-selecting desired products and leveraging price reductions weeks before the retail event kicks off,” said managing director of Payfast Brendon Williamson.
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“With access to platforms that monitor item products over time, shoppers can gain valuable insights into price fluctuations throughout the year, and gauge whether their wish-listed products really are at a good price. It’s no longer just about shopping – it’s a strategic approach.”
“As the cost-of-living climbs, and inflation remains high, the choices around when and where to spend money have gained greater significance – particularly when considering significant purchases like appliances or electronics,” he added.
Retail pressure
However, Sasfin’s Alec Abraham suggested to Moneyweb that the slump in sales this year was not just because of consumer savviness but also due to retailers adopting a more realistic approach to promotions after a tough period of higher operating costs.
“Anecdotally, I got the impression that retailers have become much more sober about Black Friday, certainly in SA,” said Abraham.
“This meant that it wasn’t about driving sales at any cost but rather more targeted ranges and pricing. Similarly, consumers were also more selective primarily due to budgetary constraints and possibly reacting to or acknowledging the more sober retailer approach to the discounting,” he added.
The year has been just as tough for local retailers as it’s been for shoppers with some of the JSE’s major firms reporting spending hundreds of millions of rands on diesel and backup power solutions to mitigate the effects of load shedding.
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The state of the consumer has left retailers with stock on their shelves for much longer than expected, forcing many retailers to resort to promotions to either get products off their shelves or to compete with their rivals for whatever consumer rands were found roaming in the market.
These were just some of the factors that led to the reporting of lower profits and margins by retailers this year and most likely reduced appetite for mega discounts this Black Friday. The stage 6 load shedding, implemented for the first time in months last Friday, will have also had an impact.
Places like Woodmead in Joburg was trending on X (formally Twitter) on Black Friday weekend, with massive traffic snarl ups due to load shedding. The node is home to Growthpoint’s Woodmead Retail Park shopping centre, Massmart’s busy Makro Woodmead big-box store, a Pick n Pay Hyper and several motor dealerships.
Online boom
The retail industry has also observed a steady migration to online purchases as consumers grow wearier of the in-store chaos that has in the past been reported at shopping malls.
A robust e-commerce offering in the country helped most major retailers soften the impact of intensified power cuts on Black Friday. The blackouts will have nevertheless put a dampener on the shopping buzz at some of the country’s shopping centres, especially those that don’t have the luxury of full back-up power generation systems.
“The physical frenzy may have been avoided because the online option has become an increasingly viable channel in SA. My perception is that the SA retailers have made enormous strides in the recent past in improving their online platforms and delivery efficiency,” said Abrahams.
According to Nedbank, online payment transactions grew by 35%, while FNB reported a 24% rise in online spend over the black Friday weekend.
For those shoppers that made it to physical stores, Nedbank said that it recorded a 47% rise in the volume of contactless payments actioned by their customers, while the value reportedly grew by 93% in comparison to 2021 figures.
On the other hand, FNB noted that 54% of all in-store transactions this year were contactless, a 10% rise year-on-year.
Source: moneyweb.co.za
