Consumers warned of overspending on Black Friday, but will they listen?

The Black Friday marketing machine has moved to high gear and wherever you turn, you are bombarded by advertisements.

According to a survey, almost 70% of respondents indicated they had plans to spend money on Black Friday specials, despite the fact that 66% of them indicated that they had been retrenched or faced salary reductions in the wake of Covid-19.

Just 18% declared that they were determined not to participate in Black Friday or had no plans to participate, while 25% were undecided.

A whole 22.9% of those who said they would spend money on Black Friday expected to buy household items, such as toiletries, staples and cleaning products, followed by clothing and appliances (19% each), while 11% would be buying electronics such as TVs, laptops and tablets.

Black Friday could not have come at a worse time for consumers, who are already drowning in household debt, with 85% of the respondents saying their finances had been directly impacted by Covid-19 and 51% saying they had no savings to fall back on, says Neil Roets, chief executive officer (CEO) of Debt Rescue.

Roets feared that consumers were unlikely to heed warnings to resist spending although many deals were nothing but bait-and-switch instead of really cheap deals.

“Retailers tend to discount a handful of items to create the impression that everything is being sold at bargain-basement prices when the facts show differently.”

Graphic: Costa Makola

He warned that the Covid-induced lockdown had a negative effect on the livelihoods of many consumers.

“The harsh reality is that after almost 10 months of reduced economic activity in just about all sectors of the economy, a large proportion of households have exhausted their savings and are now facing a massive debt crunch.”

However, he pointed out, the psychological impact of Covid-19 meant that consumers would be looking for something to cheer them up.

“Our spending history shows that most South Africans love to indulge in retail therapy even when they cannot pay for it.”

It was also concerning that the National Credit Regulator reported that almost half of all consumers were behind on their payments for three months or more due to credit and store cards, followed closely by personal loans.

It also did not help that Covid-19 had created an additional incentive for marketers experiencing sluggish economic growth to go all out to lure consumers this festive season. The results of the survey showed that consumers were not averse to applying for credit.

“However, if you are unemployed or living off a reduced household income, or having to borrow to buy, the chances are that you will pay dearly for your bargain later. Overall, we have seen a growth rate of 23% this year in consumers who have applied for debt review compared to the same period last year,” Roets says.

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