Publication: Business Insider
Date: 2022-11-22
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Eskom's load shedding on Black Friday will make things harder for shoppers and retailers, but malls with backup power stand to win big.

The consumer frenzy on the final Friday of November will be the first in two years outside of lockdown, with retailers already gearing up for an influx of shoppers. Black Friday will see physical malls and e-commerce sites fill with bargain hunters, but load shedding has the potential to disrupt both shopping experiences.

This year's runup to Black Friday coincides with South Africa's worst-ever bout of load shedding, with intermittent blackouts expected to persist on the day and for months to come.

The country's energy crisis has already dented the economy. Add in South Africa's rampant unemployment along with rising inflation, and analysts believe that while this year's Black Friday will still be an improvement on the previous year's, consumer trends will be different.

"With bleak economic prospects, we can expect to see consumers stock up on necessities rather than splashing out on luxuries for themselves or buying early Christmas presents for their loved ones," said Professor Carel van Aardt, research director at the Bureau of Market Research (BMR), which recently gave its views on the upcoming Black Friday promotional period on behalf of Capital Connect.

Shoppers rushing to stores this Black Friday will also need to contend with load shedding. Consumers arriving at stores without reliable backup power could encounter dark isles, unresponsive payment systems, and even longer queues than usual.

"Yes, load shedding will disrupt business operations and keep people away from the shops," Gerhard Le Roux, Capital Connect's head of capital growth, told Business Insider SA.

"South African retailers can still expect to generate around R17.3 billion in additional sales over this Black Friday promotional period, which represents a growth of 6.7% compared to the previous year. However, this is an estimated R5.4 billion less than would be the case without extreme load shedding."

And while unprepared brick-and-mortar retailers will be hardest hit by load shedding, e-commerce could also lose out if their systems haven't yet been stress tested with the added pressure of blackouts.

"E-commerce has become time-critical, with consumers expecting fast confirmation of orders and quick delivery. As such, e-commerce retailers need to ensure an unstable power supply does not affect their ability to provide a seamless experience for online shoppers," said Le Roux.

The key to attracting the bulk of shoppers, added Le Roux, is in ensuring stores, especially the physical ones, are equipped with backup sources of power. This includes solutions like generators, solar power, and battery storage.

"In the aftermath of Covid and working from anywhere, consumers are picky about where they go to shop. Retailers that have invested in alternative power to ensure their business is fully operational will reap the benefits," said Le Roux.

"Retailers that can only generate sales when there is power will feel the effect of their decisions on their balance sheet in the coming months."

South Africa's leading brick-and-mortar retailers, Shoprite and Pick n Pay, told Business Insider that their outlets were well-quipped with backup power to handle the influx of Black Friday shoppers.

"We do regular planned maintenance on all our generators. We also do load tests, when there's no load shedding, to ensure they are in working order," said Sanjeev Raghubir, Shoprite Group sustainability manager, ahead of Black Friday.

"Maintenance on solar systems is done three to four times per year to ensure we get the maximum amount of electricity from our solar PV installations."

Similarly, Pick n Pay said it relied on generators to keep the power on during load shedding and that its "clothing stores are rolling out battery solutions."