Black Friday 2024
R88 Billion shot in the arm for the South African economy
Black Friday shopping season 2024 is projected to give the South African economy an R88 billion shot in the arm
South Africa’s wholesale, retail and fuel sectors are forecasted to generate more than R88 billion in additional economic value for the economy as a whole during November 2024 amid surging consumer interest in Black Friday sales. That’s according to research commissioned by Capital Connect, a fintech that offers fast, flexible short-term business funding to retailers.
The study* shows that retailers in South Africa will generate R22 billion in additional direct revenues as a result of Black Friday sales this year, as well as generate R28 billion in indirect economic impact.** In this same period, the wholesale sector will gain additional sales of R32.1 billion, while an additional R6.2 billion in fuel sales will be generated.
The study finds that consumer interest in Black Friday looks to be higher in 2024 than any of the past three years (2021 to 2023). This boost is expected to help drive total retail sales for November 2024 to approximately R136 billion, up 17.3% in nominal terms from the R116.1 billion recorded in November 2023. Total retail sales during 2024 is forecasted to be R1.45 trillion, which is a 5.7% improvement in nominal terms on total retail sales of R1.37 trillion during 2023.
“The positive outlook for Black Friday 2024 indicates that the tide is turning for South African retailers after a long period of economic and retail stagnation,” says Steven Heilbron, CEO of Capital Connect, part of Nasdaq and JSE-listed Lesaka Technologies.
“Among the factors that have helped to improve the economic outlook include vastly reduced load shedding, the introduction of the Two-Pot Retirement System, an interest rate cut, and lower inflation. Innovative retailers with the right product mix and promotions will benefit from the resulting rise in consumer confidence.”
Black Friday impact by retail subsector
Black Friday sales are a welcome boost for retailers after a challenging year, with the formal retail sector expected to show real growth of only 1.4% for the whole of 2024. The analysis projects that additional sales for retail subsectors (direct impact) during Black Friday 2024 will be as follows***:
General dealers: R10.5 billion
Textiles, clothing and footwear retailers: R5.6 billion
Household furniture, appliances and equipment retailers: R1.8 billion
Hardware, paint and glass stores: R1.5 billion
Food, beverages and tobacco in specialised stores: R278 million
Pharmaceutical and medical goods stores: No significant gains.
All other retailers: R2.4 billion (Those that do not fall into any one strict sub-category, i.e. second hand stores)
Total Black Friday direct retail gains will amount to R22.08 billion, with most gains coming from consumers buying necessities rather than luxuries. Two major beneficiaries of Black Friday will be the wholesale sector as a major supplier to retailers, as well as fuel sales due to the heightened level of deliveries of goods to retailers and consumers.
The Black Friday period increasingly sets the tone for the all-important month of December, with the lines blurring between November promotions and the festive season. The data shows that total retail sales are forecasted to be 19% higher in November and 48% higher in December than they were, on average, for the first 10 months of the year.
Heilbron says: “The last two months of the year are an opportunity for agile, forward-thinking retailers to grow by outsmarting their competitors. They need to move fast to seize opportunities, with a particularly tight focus on getting in the right stock at the right price to offer promotions that increase foot traffic and basket size.”
Seizing the Black Friday opportunity
According to Heilbron, here are some ways retailers can excel during this vital promotional period:
Strengthening their omnichannel offering with seamlessly integrated in-store, online and hybrid capabilities (i.e. order online and collect in-store). This will help them target new demographics and expand their geographical reach.
Improving customer experience by developing loyalty programs that reward repeat customers.
Optimising product mix to attract both value shoppers looking for necessities and discerning consumers with more disposable income.
Focusing on niche markets (offering unique or hard-to-find items) for differentiation.
Leveraging technology (e.g. AI for personalised marketing or chatbots for customer service) to improve efficiency.
Using shopper-tainment tactics like product demonstrations or workshops to attract customers into the stores.
Balancing promotions to take advantage of the prolonged Black Friday and festive season shopping period, without reducing consumer urgency to shop. Mix up offerings of promotions, sales and discounted offers.
Adds Heilbron: “Fast, fintech short-term financing tailored to retailers’ unique needs is the key to capitalising on Black Friday opportunities such as doing bulk buys at discounted rates, investing in shopper-tainment, adding additional profit centres, diversifying the product offering or investing in omnichannel strategies.”
“Capital Connect offers retail business funding of up to R5 million, with funds in the retailer’s bank account in just 24 hours. Retailers can apply for a quick smart loan by clicking and borrowing from an app, with minimal red tape and no need for audited financials. We offer repayment in easy daily instalments, enabling retailers to manage their cash flow. Our opportunity capital empowers retailers to act fast, so they never lose out on growth opportunities.”
** The indirect economic impact refers to the additional sales value of the suppliers of retailers, the manufacturers from which the suppliers obtain their stock, the producers of raw materials being used by manufacturers, the transporters of goods, etc.
***Numbers rounded