Black Friday: Consumers focus on staples, instead of luxury goods

The deals were there, but the queues, crowds and jostling for special deals were few and far between on Black Friday as necessities rather than niceties appeared to be the order of the day.

And while companies were still crunching numbers yesterday, retailers were bullish on Friday even as many turned to online shopping.

ALSO READ: Black Friday: One South African spends R397 217 on two items

Will Black Friday add to economy?

However, whether or not Black Friday will play a role in boosting SA’s economy, remains to be seen, especially after last week’s repo rate increase.

Director of Political Futures Consultancy Daniel Silke said people had been splurging on the essentials which retailers offered.

“While, of course, retailers have been offering discounts, real or otherwise, on high ticket items such as TV sets, electronics and home appliances, I think Black Friday in SA has become much more focused on basic staples.”

Silke noted it could be part of a broader spend, adding that he did not believe it would add to the greater economy. “I think we’re seeing consumers substitute their spending which they might do over the next month or two on essentials,” he said. “When consumers are cashstrapped, they are going to take advantage of Black Friday specials, especially when it comes to basics and fast-moving consumer goods.”

Dr Azar Jammine, director and chief economist of Econometrix, noted consumers were compensating for the erosion of disposable incomes through higher inflation and increased interest rates by borrowing more than they have done in several years.

READ: SA’s repo rate hiked by 75 basis point

“Growth in household credit demand is increasing at its fastest pace since about 2013/14 when there was a boom in unsecured borrowing from African Bank and other microlenders,” Jammine said.

“The positive feature is that the level of household debt to disposable income is still relatively modest suggesting that there is still scope for consumers to keep borrowing in the near term without too many ramifications.”

Growth in retail sales

Jammine warned if this were to continue for an unduly long period “there would be a payback.”

“As it is, part of the increase in inflation can be attributed to a surprisingly resilient level of consumer spending and probably also accounts at the margin for one of the factors contributing to the reserve bank,” said Jammine.

“It is important to bear in mind that we are not talking about a boom in retail sales, just that retail sales are not declining as much as one might have expected in light of the increase in inflation and the rise in interest rates. One has to expect the growth in retail sales to gradually decline to virtually no growth within the coming year or two.”

Mobile payments

Mobile payments led the way this Black Friday, with 70% of total transactions driving sales, versus 30% on desktop, according to leading payment gateway PayFast. The average basket size was R1 255, slightly higher than 2021, which recorded an average of

R1 208 per basket.

Electronics, appliances, beauty and fashion drove the bulk of sales, said PayFast managing director Brandon Williamson.

“Black Friday has become a highly anticipated annual event in South Africa, with people planning their wish lists weeks, and even months, in advance. Between high inflation and increased food, petrol and energy costs, shoppers are more motivated than ever to take advantage of Black Friday deals whether it is to stock up on groceries and basic consumables, or a post-pandemic splurge,” Williamson said.

He noted while many retailers had reverted to the one-day format of Black Fridays past, big names like Takealot and Superbalist had been running specials for the entire month of November. Despite this, ecommerce activity spiked on Black Friday itself;

“Transactions peaked between 9 to 10am, with many shoppers already making purchases just after midnight,” said Williamson.

PayFast recorded R397 217 split over two purchases by one shopper as the largest transaction value for the day. The number of transactions PayFast processed increased by 20% compared to the previous year.

Overall spend from FNB card users in 2021 amounted to R2.5 billion, a 15% increase from the previous year and the bank expected a further increase this year with transactions swayed towards digital payments.

– amandaw@citizen.co.za/Additional reporting by Ina Opperman

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