Black Friday was off to a slow start and the impact of lockdown was clear when the day’s sales started with total spend decreasing by 63% and trading volumes falling by 33% compared to last year, in the first minute after the clock struck midnight.
This was the opposite of last year, when a shopping frenzy between midnight and 02.00am in the morning showed how eager people were to shop. This year, the first two hours saw 40% less transactions, with a total value of 59% lower than in 2019, but by 08.00am people started shopping online, and buying for the day peaked in the same hour as last year with 39% more money spent at R38m.
“This continued throughout the day, with a second peak reached in terms of the number of transactions, processed between 19:00 and 20:00 when people returned home from work,” explains Karen Nadasen, CEO of PayU South Africa and chairperson of the Ecommerce Forum of South Africa (EFSA).
According to PayU, trading volumes in South Africa grew by 14.1% over the 24-hour period, compared to 2019, while trading volumes in the days from the Monday before Black Friday were 9.1% higher than last year.
Although these figures are an improvement on last year, they are not as dramatic as the previous regarding year-on-year growth. However, PayU noted these volumes are still approximately 400% higher than on a normal shopping day.
The pandemic has forced consumer to get better acquainted with online shopping, but it has also hit household budgets. Many companies also extended their Black Friday deals to more days to ensure more space in shops for social distancing.
A total of 95% of transactions were paid for by card, an increase of 11.9%. However, mobile transactions made up only an average of 60% of transactions, while it has been between 75% and 85% since the start of lockdown.
The retailers are smiling because they got 79% of the day’s trade, 19% more than last year. The beauty industry’s volumes also increased by 59% and fashion by 117%. Travel agents were not so happy, with just 11% of transactions for travel, which is quite a lot less than last year’s 20%.
“While there were infrastructure problems for some retailers, and PayU were able to come in and assist, for the most part, things were pretty stable for merchants. PayU moved to the cloud several months ago, and this aided us greatly. We also are fortunate to have a backup for our backup,” Nadasen concluded.
“E-commerce during Covid-19 seems to be one of the very few bright spots in an otherwise disastrous economic and health environment. This year’s lockdown has driven many consumers to shop online, in response to the requirement for limited human contact, but the measure of success this year is that more and more South Africans are learning to trust online shopping,” says Alastair Tempest, CEO at EFSA.
Online payment gateway, PayFast, also believes that online shopping boosted Black Friday, with total online transaction volumes increasing by 50% compared to 2019. The company processed a 283% increase in total payment volumes on Black Friday alone, compared to a normal busy day such as payday.
“This year’s Black Friday spend surpassed the volumes seen in previous years. The rapid adoption of e-commerce over the course of 2020 has meant that more people were shopping online, especially amid fears of a Covid-19 resurgence,” says Jonathan Smit, MD and Founder of PayFast.
Online shoppers spent more per basket, at R1 243, compared to the average basket value of R803 for 2020. According to Smit, consumers spent their money on TVs and gaming consoles as in previous years, but they bought more of the traditionally brick-and-mortar, retail store focused items, such as toiletries, cosmetics and essentials.
PayFast also found that 66% of transactions were done with a mobile device. “Smartphone usage means you can shop literally from anywhere, any time. This Black Friday offered a more considered and improved customer experience across the board. Lockdown was a good test for many e-commerce businesses, with lessons carried into this peak period,” says Smit.
This year, 66% of transactions were made using cards, but alternative online payment options are on the rise: “Instant EFT, QR codes and mobile wallets are becoming more popular as consumers become more comfortable shopping online,” says Smit.
Prof Jannie Rossouw, interim head of the Wits Business School, says the figures show that consumers have learnt to be more minimalistic. “We must also remember that many businesses spread their specials out over a longer time and you can only really see the full picture once all the figures are available.”
Dr Elna Moolman, head for SA economic, fixed income and currency research at Standard Bank South Africa, says she sees a gradual recovery in total consumer spending from the steep decline at the beginning of the national lockdown. “We expect this pattern to also be true for the annual growth rates in total real spending – that a deep contraction in 2020 will be followed by a gradual recovery in 2021 and a further recovery in 2022.”
Standard Bank views job losses as the key risk to the gradual recovery that it foresees in total consumer spending. “The available data implies that job losses peaked around July and there seems to have been a tentative and mild recovery thereafter, although we expect it will take several years to revert to pre-lockdown employment levels.”
“We are monitoring a number of unofficial real-time employment proxies very closely, given our concerns about job losses and the potential implications that this could have for the general economic recovery that we foresee,” she says.
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