A confluence of factors, including interest rate cuts, the government of national unity and the end of load shedding, are creating positive vibes in the retail sector, and Black Friday could initiate a sales boom leading into the festive season.
This is according to a Black Friday 2024 report commissioned by Capital Connect and conducted by the Bureau for Market Research (BER). The forecast comes after last year’s Black Friday event was generally viewed as disappointing, with spending muted.
“It’s good to hear the tide is turning, because we have had three or four tough seasons for retailers,” said Steven Heilbron, CEO of Lesaka Technologies-owned Connect Group, parent of Capital Connect.
“Retailers should be leveraging tools like big data and ensuring they are stocking up on the right products in this critical sales period going into December to ensure they are getting their fair share of the cake.”
According to the report, Black Friday sales are expected to rise by R22-billion year on year in 2024, with the total economic impact – accounting for secondary beneficiaries including the wholesale and fuel services markets – estimated to reach R50-billion.
Capital Connect predicts 21% of all formal sector retail sales in 2024 will flow directly from Black Friday and the festive shopping season. November sales are projected to be around 20% higher, and December sales 42% higher, than the January to October average.
Subsectors
The various subsectors of the retail industry are expected to benefit at different levels from the projected growth in retail sales. Retailers in textiles, clothing, footwear and leather goods are expected to exhibit the most significant real growth year on year at 6%, with the household, furniture and appliance subsector following suit at 4%. General dealers will grow at just over 1% year on year in real terms, said the report.
Requier Wait, chief researcher at the BER, said falling interest rates are helping put more money in the hands of the consumer, with lowered borrowing costs also making it likelier that they can eye bigger-ticket purchases as part of their Black Friday shopping basket. However, according to Wait, South African consumers still list basic necessities as a top priority when making purchasing decisions.
With shoppers’ behaviour showing an increased preference for all-in-one shopping experiences, general dealers are expected to do well this Black Friday, with sales estimated at R10.5-billion. Textiles, clothing and footwear are expected to follow at R5.6-billion; household furniture and appliance stores at R1.8-billion; and hardware, paint and glass stores at R1.5-billion. Food, beverage and specialised tobacco stores are expected to make around R278-million from Black Friday sales.
A survey conducted in compiling the report found that around 44% of retailers list cash flows and access to capital as the biggest challenges in 2024. Last year the biggest issue was by far managing operations in the face of load shedding. The survey also found that local retailers are concerned about competition from foreign e-retailers such as Shein and Temu, which don’t have a big presence in the country. But Wait said Shein and Temu’s impact will be limited to online sales.
The report predicts the split between online and brick-and-mortar sales on Black Friday will roughly align with ongoing trends, meaning only around 6% of sales are expected to be driven by online platforms. Capital Connect advised retailers to ensure their various touchpoints have smooth journeys to facilitate an omnichannel shopping experience for customers.
Read: Black Friday damp squib in South Africa
Another factor driving increased optimism towards sales growth during Black Friday 2024 is the abatement of port woes that crimpled the logistics sector in 2023, causing many retailers to offer fewer discounts than consumers anticipated due to the unavailability of stock.
“It is clear from this report that although retailers are still operating under low economic and retail growth conditions, there are some reasons for optimism with respect to the retail, wholesale and fuel trade sectors. It is especially positive in this regard that there are great opportunities for retailers, wholesalers and operators in the fuel trade to capitalise on Black Friday sales and to use that as a springboard to capitalise strongly on festive season sales as well,” said the report. – © 2024 NewsCentral Media
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