The Black Friday season is expected to create additional retail turnover of R26.6 billion for South African retailers in 2023, creating some 150,000 job opportunities across the South African economy, most of them temporary or seasonal, and representing a significant increase over the R19 billion in additional sales generated in 2022. That’s according to new research conducted by the Bureau of Market Research (BMR) on behalf of Capital Connect.
Despite the gains over 2022, additional sales value for 2023 over the Black Friday period is still behind the additional R42 billion in additional retail turnover generated in the same period in 2021. Following two years of weak economic growth, 2023 is not expected to reach the heights of 2021, when sales were lifted by more than a year of pent-up demand after the COVID-19 lockdowns.
Forecasts for performance by retail subsector for the period between 29 October and 26 November 2023 are as follows:
General dealers: R 9.3 billion gain.
Food, beverages and tobacco: No significant gains.
Pharmaceutical, medical goods: No significant gains.
Textiles, clothing and footwear: R 15 billion gain.
Household furniture, appliances and equipment: R 1.6 billion gain.
Hardware, paint and glass: R 707 million gain.
“Black Friday 2023 and the festive season provide a unique opportunity for savvy retailers to capitalise on increased consumer spending,” says Steven Heilbron, CEO of Capital Connect, a fintech that offers fast and flexible business funding to retailers. “Beyond this seasonal surge, the IMF’s revised economic outlook for 2023 indicates that South Africa’s GDP growth may come in at a higher than expected 0.9%. This indicates slight improvements to market conditions for retailers.”
Luxuries are off the menu as consumers stock up on essentials
Black Friday has traditionally been an occasion for consumers to spoil themselves by splashing out on confectionaries, consumer electronics and white goods. But continuing the post-pandemic trend, the research anticipates that cash-strapped consumers will be seeking bargains on food staples, household essentials, clothing, and hardware for urgent home repairs and maintenance. Most consumers are holding off on replacing large appliances as long as possible, though sales of small domestic appliances may get a small uplift.
As is traditional over the Black Friday period, retailers with a strong online presence are expected to benefit heavily from this promotional period. Instead of only visiting shops to seek Black Friday bargains, consumers are increasingly buying retail goods online. Online retail channels surpassed the R50 Billion mark or 4.2% of retail value in 2022 and are expected to grow to about 15% of total retail value in 2030.
The recipe for success: Diversification and meeting customers at their preferred touchpoints
The retailers that will be best positioned to benefit from Black Friday 2023 will be those that focus on the right products and diversify their product ranges; ensure that their customer touchpoints are aligned with customer channel preferences; conduct sound cash flow management and identify sources to quick, affordable working capital; and continuously identify growth strategies.
Says Heilbron: “Our research with South African retailers consistently finds that they identify cash flow and access to capital among their biggest challenges. But fintech innovators like Capital Connect have changed that picture with financing solutions that cut the red tape and provide instant access to opportunity capital.
“With access to fintech funding, retailers get a capital injection of up to R5 million and approved funds in their bank account within 24 hours. This enables them to move fast to capitalise on growth and expansion opportunities, from acquiring businesses, to diversifying their offering or making bulk inventory purchases at discounted rates to never miss out on retail opportunities.”
Barry Moldenhauer of Spar Mdantsane says: “As retailers, we are often confronted with opportunities we can’t take advantage of because we don’t have quick access to capital. Fast fintech financing allows us to get access to efficient capital to take advantage of retail opportunities. We installed perishable fridge doors to save on our electricity bill.”
“Black Friday sales are a central part of a shopping festival that spans from late October to late December,” says Professor Carel van Aardt, Research Director at the BMR. “But the sales profile of Black Friday differs from the festive season, thus creating opportunities for savvy retailers to capitalise on revenue opportunities by adjusting to shifting consumer demand. Higher earnings during this important season will help retailers to compensate for depressed consumer spending throughout the year.”